July 1 (Bloomberg) -- Crude oil is set to extend gains amid this week’s volatility and may reach the $76 a barrel level last traded in mid-October, said the head of Cameron Hanover Inc. The market’s ability today to stay close to the psychologically important $70-a-barrel mark is keeping prices from slipping into a technical downtrend channel on the daily continuation chart, said Peter Beutel, president of the New Canaan, Connecticut, trading advisory firm. Oil rose 41 percent between April and June, the biggest quarterly climb since 1990.
“The rally has given the bulls a new lease on life and it now gives them the chance to take a run at buy-stops above $73.23,” Beutel said. “That level is acting like a magnet.”
Oil yesterday spiked above $73.23 a barrel, which stood as the June high for more than two weeks, as the dollar declined and escalating militant attacks in Nigeria raised concern supplies may be disrupted.
Other technical readings also hint at upside momentum. The weekly Moving Average Convergence-Divergence oscillator continues to hold firm above its signal line, indicating support.
“Momentum is a two-edged sword,” said Beutel. “It can show strength, or it can show overbought pressures.”
Further resistance is marked by the upper Bollinger Band, a moving objective around $74.64 a barrel today, before $76.28. That’s the 38.2 percent Fibonacci retracement of the rise to $147.27, the all-time high registered July 11 last year, from the December 19 low of $32.40. Oil last traded at $76.28 on October 15.
“If prices fail below the Fibonacci figure, after triggering buy-stops, it could be a sign of a possible top,” he said. “If they sail up through that $76.28 figure, it would be bullish.”
Front-month crude oil futures for August delivery on the New York Mercantile Exchange, up 56.7 percent in 2009, traded at $70.96 a barrel at 3:20 p.m. Singapore time.
To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net
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