Crude oil prices may remain trading upwards

Crude oil prices remain trading upwards even if the oil market unwinds gains made this month and falls back toward $70 a barrel, according to an analysis of price charts by National Australia Bank Ltd.

Oil traded below $80 a barrel for a third day today as traders exited bets on higher prices amid a stronger dollar and declining stock markets. While a further decline is possible, a reversal of the four-week rally “is not cut and dried yet,” said Sydney-based technical analyst, Gordon Manning.

“The tree was shaken but serious damage hasn’t been done yet,” he said in a telephone interview. “The pattern is still going to be very positive while we’re above $70. If oil comes back to $70 it’s still going to look fine. Oil may “have another good look at $70,” Manning said. “If we are going to see a pullback in the stock market and a rally in the US dollar, oil will pull back.”

Manning, who correctly predicted on Sept. 30 that oil will rise above $70 a barrel, pegged his targets for price support at $69.77 and $66.10 a barrel in a weekly note on Oct. 26. He also maintained his call for the market to rise to between $88 and $100 a barrel over the long term.

Oil last traded at $88 a barrel in October last year. That’s about halfway between the descent from an all-time high of $147.27 a barrel in July last year to a four-year low of $32.40 a barrel in December.

“Short term, you wouldn’t be rushing out to buy,” Manning said. “You can probably afford to sit and just see what sort of a pullback we get.”

Tags:  oil prices, trading