Michael Knox, Chief Economist at Morgans, says that there are seasonal and cyclical forces driving oil prices higher in 2014. We do not think that oil is going up only for seasonal reasons. We think oil is going up because the growth of developed economies will proceed at the fastest pace since before 2007. Our model for Brent tells us that it should rise to $US124 per barrel this year. In addition to cyclical tailwinds, Knox says that both Brent and WTI prices are in the early stages of a seasonal rally influenced by motorist behavior in the US. An index of seasonal price fluctuations indicates that Brent and WTI will rally 11% and 14% respectively from their seasonal lows in December and January to their highs in June and July. According to Knox we are seeing seasonal and fundamental rallies happening at the same time.



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