Over the past few years Crude Oil has seen major swings in price, with 2015 being one of the most volatile years on record. Since then the market has begun to settle into a sideways range, with ‘fair value’ price at around $49.

The chart below shows ICE Brent Crude Oil over the past two and a half years. On the left is the volume-by-price profile, showing how much trade has been done at each price level.

As can be seen an almost perfect bell shaped distribution has formed, with the most ‘popular’ price at around $49. This is shown by the pink line, which is know as the Point of Control. It is the price which is considered ‘fair value’, and the market is likely to oscillate above and below this for some time, unless there is a fundamental reason for change.

For more information on volume and market profiles, I recommend Dalton’s excellent book ‘Mind over Markets’

Chart showing market profile (left y-axis), with Point of Control in pink

About the author

Trading and Investment

Traded the markets for over 15 years, including Commodities, Bonds, Currencies, Equities, and Indices. I have also worked as a Chartered Financial Planner.
CeMAP, CeFA, DipFA, AdvDipFA, Ba(Hons) Economics, Chartered ALIBF

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