15 June 2013, News Wires – US crude oil prices may rally as high as $100 a barrel as early as Monday after surging through a downward trendline that has been building for four months, chartists said on Friday.
The Nymex July contract hit a nine-month high of $98.25 a barrel on Friday after a three-day rally took prices up more than 3%. Prices settled up 1.2% on Friday at $97.85, Reuters reported.
That decisive move higher came a day after prices ruptured a trendline for July futures, drawn from the 13 February contract high at $99.77 and crossing the highest point it hit during the month of May at $97.33.
“It’s definitely a breakout. And, it’s aggressive enough in the short term to test the high and make a new high,” Peter Ruud, technical analyst at Informa Global Markets in New York, told the news wire.
He said he sees enough momentum behind the price to get it back up to the February high as early as next week, as long as any pullbacks do not take it below its May high.
“I don’t see any divergence on the daily chart to think that it won’t keep on going. But, if it gets back below $97.33, the May high, there’s potential that momentum is stalling,” he said.
Iitrader.com chief market strategist Rich Ilczyszyn in Chicago said oil could reach $100, as shorts race to cover their positions after the market’s violent move up this week.
He pointed out that traders and investors have had their eye on the trendline slope for months and had positioned themselves for a possible breakout, and would not want to remain short.
He said that with the market closing above $97.50 on Friday, he expected the contract to re-test the 13 February high at $99.77 by Sunday night, putting the price of $100 a barrel easily within reach on Monday.
Some chartists are not so bullish. Michael Korn, Skokie Energy president in Princeton, New Jersey, said traders likely covered shorts during this week’s rally.
“I don’t think there will be enough of those buyers that need to cover shorts to push it higher,” said Korn, asking who would be left in the market to buy.
“Are you going to see new longs at this level? I think new longs would have come in yesterday after we broke the $96.40 (June high) level and during this morning’s rally,” he said.
Instead, he said he thinks the market will most likely take time consolidating the latest push higher with some sideways range trade.