Bloomberg Analysis: Crude Oil to Hit Resistance Level at $86.70 This Week

Crude oil may fail to breach the $86.70 a barrel level this week based on statistical analysis used by traders to gauge prices, the Schork Group Inc. said. Crude’s resistance at that level corresponds to the upper limit of the confidence interval, a statistical range with a specified probability that a given parameter lies within the boundaries. Oil is most likely to trade this week between $76.76 a barrel and $86.70, according to the Schork Group.

Oil prices have jumped 4.7 percent since Sept. 29 to $81.53 today as signs of positive economic growth in the U.S. and China improve the outlook for fuel demand. Crude’s gains may sputter to a halt as prices climb to highs reached earlier this year in April and May. “Prices will hit serious resistance in any attempt to cross the $86.70 barrier,” said Schork Group President Stephen Schork. Oil climbed to this year’s highest close at $86.84 on April 6 and reached $86.19 on May 3, followed by sell offs below $70, he said.

The November contract was at $81.52 a barrel, down 6 cents, in electronic trading on the New York Mercantile Exchange at 11:54 a.m. Singapore time after reaching $81.87. It surged $1.61 to settle at $81.58 on Oct. 1, the highest close since Aug. 5, capping the biggest weekly gain since February. “The bulls should have enough momentum to hold prices close to either side of the $80 barrier, thus we expect prices to trade safely inside our confidence interval,” the Schork Group said.

Reporter Christian Schmollinger can be contacted at christian.s@bloomberg.net.

Courtesy Bloomberg News


Get The Hottest Investment Plays in North America: Keith Schaefer's Oil and Gas Bulletin

Share

Crude Oil: Verge of Collapse?

Stephen Schork, editor of The Schork Report, and Bruce Lanni, of Nollenberger Capital Partners, share their energy outlooks.




Can you learn to short this oil market?....Get Started Trading Now With 10 FREE Trading Lessons

Share

Crude Oil Falls for First Time in 11 Days as Dollar Climbs

Crude oil declined in New York for the first time in 11 days as the dollar climbed against the euro and China moved to slow bank lending. Oil fell as much as 1.1 percent after the greenback rose as the number of Americans filing first time jobless claims climbed less than forecast. A stronger dollar curbs the appeal of commodities to investors. China’s central bank sold three month bills at a higher interest rate for the first time in 19 weeks after saying it will focus on controlling expansion in lending. “The rising dollar is the biggest influence right now,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “It’s weighing on just about all of the commodities.”

Crude oil for February delivery declined 52 cents, or 0.6 percent, to $82.66 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil climbed to $83.52 yesterday, the highest level since Oct. 14, 2008. The U.S. currency increased 0.6 percent versus the euro to $1.4323, from $1.4408 yesterday. The Dollar Index, which tracks the dollar against currencies including the yen, pound and Swedish krona, rose 0.6 percent to 77.933. The Reuters/Jefferies CRB Index of 19 commodities fell 1 percent to 290.93, the first decline this year. “Today’s small move is nothing after 10 days of gains,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “We could fall for a couple days and it would still be the bulls just catching their breath”.....Read the entire article.


Candlestick Formations You Need To Learn


Share

Oil Falls for 2nd Day as Refiners Idle Units, Fuel Supply Gains

Crude oil fell for a second day as refineries idle units for maintenance and on speculation that U.S. fuel stockpiles will climb as consumption declines.

U.S. refiners perform repairs and upgrades in September and October as gasoline demand falls and before heating oil use rises. U.S. supplies of distillate fuel, a category that includes heating oil and diesel, climbed to their highest level since 1983, an Energy Department report showed last week.

“The fundamentals for oil are bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “The driving season is over, heating oil demand has yet to pick up and refineries are going into turnarounds, which means a lot of demand for crude oil will be offline. If there is a correction, it’s going to happen now”.....Read the entire article