Because we project that the global economy will not slide back into another recession, we forecast that oil prices will remain in the $70 to $90 range for the foreseeable future.7 The only possibility of a much lower price of petroleum may be if there is a collapse in global economic activity, in which case the price of petroleum could get as low as the $10s per barrel. However, the consequence of such an event will be that of even higher oil prices in the future than what we are seeing today. World consumption should remain strong during the next several decades and will support high and sustained petroleum prices. Furthermore, new petroleum extraction technologies will allow the petroleum supply to continue to expand as the price of petroleum rises.

We expect the effects of new alternatives to petroleum to continue to develop, especially if petroleum prices remain as high as we expect. However, we do not expect the new alternatives to have a large impact on petroleum utilization in the short to medium term. Demand for petroleum from the world's emerging economies should be enough to keep petroleum prices at current levels or even higher if the developed world put its act together in the coming years. In the long term, new technologies should help petroleum and nonpetroleum alternatives add to the energy supply, and the world energy market should become more competitive. However, until then, we can expect petroleum prices to remain high and trend higher if world economic activity accelerates.

Eoin Treacy's view Oil prices have been largely rangebound for more than a year, albeit with a mild upward bias. This congestion area has been characterised by a good deal of ranging followed by swift moves both up and down. The fall from the April peak was somewhat larger than others seen over the last year and mirrored the severity of the decline seen on Wall Street and many European indices. Prices found support in May near $65 and quickly rebounded. Oil has sustained a progression of higher reaction lows since then with the most recent being in July near $71.

However, the volatility which was a major characteristic of the market between 2004 and 2006 has reasserted itself. Upward breaks are not being sustained, declines are abrupt and the lower low posted in May was an inconsistency, although quickly countermanded. The 200-day moving average offered an area of support on a number of occasions from mid-2009 through to early May and prices rallied back above that mean once more over the last couple of months.

The current pullback was characteristically sharp but prices are now testing the first area of potential support in the region of the MA and the psychological $75. An upward dynamic would confirm at least short-term support in this area while a sustained move below $71 would be needed to question medium-term upside potential. The extent of the volatility suggests that trend running tactics are less likely to be profitable and the environment is more suited to a buy-low-sell-high baby steps strategy.