April 3 (Bloomberg) -- Crude oil’s rally may carry on to $68 a barrel, technical analysts at Credit Suisse Group AG and BNP Paribas SA said.Oil futures in New York formed a “base” between $40 and $50 a barrel in the first quarter from which prices can rally further, David Sneddon, head of technical analysis at Credit Suisse in London, and Andrew Chaveriat, a BNP analyst in New York, said separately.
Having broken out of the range set by the rally from Dec. 19’s four-year low of $32.40 to the high of $50.47 on Jan. 6, prices are poised to move higher. Oil may repeat the $18.07 a barrel gain of that December-to-January advance, giving a target of about $68.50 a barrel, the analysts said.
“You wouldn’t give up on the rally yet, it still has legs,” Sneddon, said yesterday at a London presentation hosted by Bloomberg LP, the parent company of Bloomberg News.
Futures on the New York Mercantile Exchange, 19 percent higher this year, traded at $53.07 a barrel today.
Crude will first be drawn to $59.50, a price target shown on a so-called Fibonacci chart as a 23.6 percent recovery of last year’s crash from July’s record of $147.27 down to $32.40. Prices may then peak near $68.50, Sneddon said.
The ratios used in Fibonacci analysis are based on the sequence identified by Italian mathematician Leonardo Fibonacci in the 13th century and used to predict support and resistance levels for prices.
In contrast to Seddon, BNP’s Chaveriat said crude may surpass the target near $68 and rise above $70 a barrel in the next three months. The contract will be drawn towards its next Fibonacci level of $76.28, a 38.2 percent retracement of last year’s decline, Chaveriat said.
“It would not be unreasonable to see $71 or $72 later this summer,” Chaveriat added. “The best barometer showing the path of least resistance is upwards in the medium term is the big base we built back in December, January.”
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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