Today’s chart plots the CRB Index, a weighted basket of 19 commodities, against the two major crude oil products, West Texas Intermediate (WTI) and ICE Brent Crude.
The horizontal orange line was the support area for the CRB during the minor correction throughout the 2006-07 lows, before the large bubble in commodity prices through 2008, where it crashed through to a new decade low.
Recently, from the 2009 low, the CRB climbed back up to this now resistance line, and was only pushed over by the QE2 program by the US Federal Reserve. It is now reverting back to this mean as stimulus turns to austerity across the developed world.
What is even more interesting is the divergence of crude prices from the CRB Index, and particular the ICE Brent Crude. Whilst the WTI Crude price has followed the CRB, in recent weeks it has put on a rally, and is now trying to catch up to Brent Crude, which did not suffer much of a correction at all.
Are speculators loading up on positions trying to pre-empt a QE3 announcement?