NEW YORK (Reuters) - If oil prices do not rally hard on Friday, they seem doomed to drop below $30 a barrel for the first time since 2003, according to chart-watching analysts.
Brent recouped some losses to close at $33.75 on Thursday, but remains vulnerable to a further retreat, according to technical analysts who study historical price charts for future direction.
Unless Brent rebounds quickly above $38.99 and WTI tops $38.40, their intraday highs from the first day of trading this year, it has much further to fall, warned Dean Rogers, senior analyst at Kase & Company.
“My target is Brent will take out support at $31.81. After that, it could fall to $27.40, maybe even $26,” he said, referring to successive lows hit by Brent in May and June 2004, and November 2003, respectively.
A quick fix appears unlikely, Rogers added. Oil prices have spiraled lower this week as a crashing Chinese stock market rattles investors already shaken by data showing stockpiles of crude at the Cushing, Oklahoma, delivery point had reached a record.
Fawad Razaqzada, technical analyst at forex.com, set a $34.50 target for WTI to break above its short-term bearish bias, a figure based - in technician speak - on “the lower trend of a potential falling wedge pattern around the 127.2 percent Fibonacci extension level of $34.15.”
“If however WTI turns lower once more, then the next stop could well be the psychologically-important $30 handle,” Razaqzada said. “Oil remains on a slippery slope.”Brent has to get to its Jan. 5 peak above $36.20, so as to not risk a test to $30, he said.
Not everyone peering at the price charts found cause for bearishness.
Peter Ruud, technical analyst at Informa Global Markets, sees a strong chance for oil to rally, possibly in the next two weeks before turning lower again.
“I see a bullish hammer pattern developing after the losses we retraced today. If everything holds up, we could have a counter-move up to $35 for WTI, or even $38 if it gets aggressive.”
Reporting by Barani Krishnan; Editing by Marguerita Choy
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