Oil ‘Very Weak,’ Poised for Drop to $58: TechnicalGone to cash, thanks for the bump today got the rest out.
COOP
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Oil ‘Very Weak,’ Poised for Drop to $58: Technical Analysis
By PaulBurkhardt
May 26 (Bloomberg) -- Crude oil futures are “veryweak” and are poised for a drop to $58 a barrel, according to atechnical analysis by Newedge Group.
“The picture remains veryheavy” for oil, and the trend is still down, said Veronique Lashinski, asenior research analyst for Newedge USA LLC in Chicago. That adds“confidence in the bearish outlook.”
After settling below $70,the next support level on a weekly basis is at $65.05 a barrel, andbelow that $58.32, according to Lashinski.
Crude oil for Julydelivery fell $1.46, or 2.1 percent, to settle at $68.75 a barrelyesterday on the New York Mercantile Exchange. Futures touched $67.15,the lowest intraday price since May 20.
A return above $70“would signal a corrective bounce” toward $71.11 a barrel, she said.
The 5- and 14-day average directional indexes, or ADX, are rising,said Lashinski. The ADX is an average of total price movement over aperiod of time.
Crude futures won’t fall below the$60-a-barrel range, said Mike Wittner, head of oil research at SocieteGenerale SA.
The Organization of Petroleum Exporting Countrieswill cut production if prices fall significantly below $70 and consumerhedging should also help “put a floor in prices,” he said.
Tocontact the reporter on this story: Paul Burkhardt in New York at
pburkhardt@bloomberg.net.
Last Updated: May 26, 2010 06:50 EDT