Like most commodity prices, the price of oil reflects basic supply & demand for the commodity plus currency fluctuations. In the case of oil, rising price has traditionally been an economic indicator of improving international growth. Up to a point, rising oil prices have always been viewed as positive. So, how would you interpret this graph:
A technical analyst would interpret this as saying oil prices are close to breaking out to the upside and could get much higher. If so, that would indicate improving economic growth.
That might be correct in the textbooks, but I suspect the textbook needs to be updated. Today, the greatly-increased oil production from the U.S. has made OPEC a weak “swing-producer,” whose production causes oil prices to change wildly. This graph now reflects OPEC honesty.
You’ll recall early last year that oil prices collapsed, as all producers were maxing production. OPEC got together and agreed to limit their production. That worked for awhile, until prices got over $54/bbl, but then the pent-up greed easily overwhelmed OPEC discipline. When individual OPEC producers started cheating or supplying more than they promised, oil prices got stopped rising and became volatile again.
It would be racist to call the price of oil an Arab honesty index, but it is fair to call it an inverse OPEC cheating index. The more they cheat, the lower the price of oil.