Issue 1 · Late October 2026
Oil and natural gas. Each number compares the indicator only with its own past: the share of past months it is higher than; 50 is normal. For prices and rates, what is compared is how far the reading is from its own 10-year average: 100 means the furthest from that average, not necessarily a record price or rate.
This issue
Combined, the 2 indicators in this category stand at 66 warm.
No indicator here is at a historical extreme this issue.
Where each stands: Oil 72 (warm) and Natural gas 60 (warm).
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
Where it stands now
The category combined
Each month we take the median of the indicators’ positions, going back to 1979. Higher = energy costs more.
coldcoolneutralwarmhotHatched = earlier periods that were also warm
US stocks after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every warm month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
Bars: median cumulative changeEarlier months with Energy warm, excluding the current period (112)All months (563)
Median of the deepest drop below the starting month within the next 5 years: −23.6% for months with Energy warm; −4.0% for all months.
“US stocks” means the S&P 500 price index compiled by Professor Shiller (monthly average, excluding dividends).
1979–2021: average yearly change in US stocks over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
OiltoUS inflationCommon explanation: Knock-on · same direction
Energy is part of consumer prices and a cost of transport and production
This issue: Oil at 72 (warm), US inflation at 64 (warm) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.53 · in step in 38 of 42 5-year periods
Natural gastoUS inflationCommon explanation: Knock-on · same direction
Natural gas drives electricity and heating bills (most clearly in Europe)
This issue: Natural gas at 60 (warm), US inflation at 64 (warm) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.39 · in step in 25 of 42 5-year periods
Natural gastoEuro-area stocksCommon explanation: Knock-on · opposite direction
Soaring energy costs squeeze European manufacturers’ profits, especially in energy-intensive industries, most visibly in 2022; but where firms can pass costs on, share prices do not necessarily fall
This issue: Natural gas at 60 (warm), Euro-area stocks at 83 (hot) — both above normal, not in line with the common explanation (this is an inverse link).
Weak or inconsistentAgreement +0.41 · in step in 10 of 16 5-year periods
OiltoIndia stocksCommon explanation: Knock-on · opposite direction
India is a net oil importer, so rising oil prices squeeze its economy and its currency
This issue: Oil at 72 (warm), India stocks at 34 (cool) — Oil above normal, India stocks below normal, in line with the common explanation (this is an inverse link).
Weak or inconsistentAgreement +0.19 · in step in 17 of 42 5-year periods
OiltoUK stocksCommon explanation: Knock-on · same direction
Energy and materials shares weigh heavily in the UK market
This issue: Oil at 72 (warm), UK stocks at 58 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Our data show the oppositeAgreement −0.47 · in step in 23 of 42 5-year periods
In most periods the two moved the way the common explanation says, but over the whole history the direction is the opposite: the relationship may have flipped in some eras.