Oil may rise to $79.50 a barrel after holding above its 200 day moving average, according to a technical analysis by Lind-Waldock & Co. in Chicago.
Prices will probably “bounce” next week after March oil futures dropped for 10 of the past 12 sessions without sliding below support at the 200 day level, said Richard Ilczyszyn, a senior market strategist with Lind-Waldock, a division of MF Global Ltd. Oil dropped $1.04, or 1.4 percent, to $73.67 yesterday, the lowest settlement since Dec. 21.
“The 200 day moving average held, which is a sign that prices are headed back up,” Ilczyszyn said in a telephone interview.
The contract will next hit resistance at the 50 day and 21 day moving averages, which were $78.33 and $79.41, respectively, yesterday, Ilczyszyn said.
“If the market closes below $72, there is going to be a big flood,” Ilczyszyn said. “There would be repercussions across the board and we would see big drops in both gasoline and heating oil.”
A settlement below $72, which last occurred on Oct. 7 on the New York Mercantile Exchange, would be a signal for the contract to test $67.99, the price on Sept. 25, he said.
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