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Crude Oil Rally Only Gaining Momentum

Technicals | Feb 28 2012

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By Rudi Filapek-Vandyck

Investors better not be fooled by last night's pause in the crude oil price rally, warn technical analysts around the globe. They say price charts continue to indicate crude oil futures seem poised for (much) higher price levels.

US based S&P Capital IQ technical strategist Mark Arbeter believes WTI, currently trading below US$108/bbl, is destined to reach for US$130/bbl by August. In between now and then, Arbeter predicts WTI futures will first conquer US$114/bbl, then focus on US$120/bbl next. By then, he suggests, it may be time for a larger consolidation.

Technical market analysts at Barclays are equally bullish on crude oil's perspectives. The team has short term targets for Brent (the "real" price of oil) at US$126.65/bbl and then US$127.02/bb. For WTI, the analysts at Barclays are anticipating for a move above US$110.00/bbl, after which the target shall move to US$114.85/bbl, the high from April last year.

As reported last week, the team of technical analysts at Citi believes crude oil futures might target the all-time highs from 2008 this year. They see striking similarities between oil markets today and the situation in September 2010 when futures started rallying from prices below US$70/bbl to near US$120/bbl by April. Citi analysts are in particular "concerned" about what price charts are showing in terms of (Brent) crude oil priced in euros. The team signals crude oil prices in EUR are about to reach new all-time highs and they may well supercede previous peak levels by some 20% in the months ahead.

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