Oil market turmoil and trend following
Key Markets report for Tuesday, 17 March 2026
In this morning’s trading, the barrel of Brent crude oil has been hovering just above $100, after it soared from about $60 as recently as mid-December last year. The fact that the oil price has not corrected more significantly (so far, at least) should be a worrisome sign that there aren’t many sellers out there eager to cash out on a record-setting windfall triggered by President Trump’s ill-advised adventure into the Iran war last month.
This is in spite of the shifting narratives swinging between, “the Strait of Hormuz is open,” (or will soon be open) and “the Strait of Hormuz will remain shut indefinitely.” Much of what has been percolating through the information space is propaganda and psyops, making it hard for anyone to reach any sensible conclusion without having to reconsider the next hour.
As the last five-plus years’ history of oil prices has been relatively stable. We had a large rally in 2021 and H1 2022, but from there, the price settled in a horizontal range around $80/bbl and only gradually declined below $80 in H2 2024, finding support at $60/bbl. These are admittedly not great conditions for trend following and trading crude oil during this period hasn’t been fun.
Trend following as a reality check
Making decisions in these circumstances is fraught with risk, which once more underscores the merit of relying on systematic trend following strategies. Even those who do not believe in trend following should strongly consider using them as an essential navigation aide and reality check in cases where our opinions might be mistaken.However, this all changed in 2026:
Breaking of the 7-month downtrend in 2025, followed by a strong bounce off the $60/bbl lows started generating buy signals already in mid-January of this year. The 12 I-System strategies we use in our Major Markets portfolio continued shifting to the long-side well below $70/bbl with only one of the strategies switching from short to long on 3 March at $70.
The average buying price for the 12 strategies was $66.08, which generated a nearly $34/bbl windfall thus far. Those gains will hold or grow if the trend continues, or they might evaporate if it sharply reverses - there’s no predicting what might happen tomorrow.
The beauty of trend following is that the algorithms which generate the trading signals only analyze the price fluctuations of any given asset. They strictly have no idea about any war, Strait of Hormuz, who won the war or who lost it… The entire narrative side of market “fundamentals” strictly doesn’t feature in the decision-making process at all.
Neither does the imperative of being right in our passionately held convictions which, if they are wrong, can cause us to stick with a bad decision to our ultimate detriment. The dispassionate math behind systematic trend following algorithms can be an invaluable source of second opinion at such critical junctures.
Unrealistic expectations hamper performance
For full disclosure: the 12 strategies that generated the signals in the above chart are up around 34% since inception, which is not great. They had very strong performance during the 2021/22 rally but gave most of those gains back during the long trend-less period until now. This is important to appreciate too, because having unrealistic expectations is a reliable way to underperform at investing.
Trend following is not a magic solution that reliably produces positive results every month. Rather, it tends to generate strong results during large-scale price events (LSPEs). In absence of such events, during long spells of range-bound drift, results will invariably be flat or negative. However, once LSPEs take off, the resulting windfalls more than make up for the small losses, time and patience spent.
To learn more about TrendCompass reports please check our main TrendCompass web page. We encourage you to also have a read through our TrendCompass User Manual page. For U.S. investors: an investable, fully managed portfolio based on I-System TrendFollowing is available from our partner advisory (more about it here).
Today’s trading signals
With yesterday’s closing prices we have the following changes for the Key Markets portfolio:
