Crude oil will test $83 a barrel if it breaks through the 200-day moving average, according to a technical analysis by Auerbach Grayson, a brokerage in New York.
Futures may first advance to the $75-to-$76 area that was tested last week, according to Richard Ross, an analyst at Auerbach Grayson. Oil would then be set to reach $76.68, which corresponds with 200-day moving average. The $83 level is near peaks the oil market reached in December and March.
“When the dust settles, the bullish longer-term view will come into view,” Ross said in a telephone interview. “Summer is coming, and with it the peak travel season.”
Oil has tumbled as much as 26 percent on an intraday basis after reaching a 19-month high of $87.15 on May 3.
“Oil must now take baby steps before it can run with the bulls,” Ross said.
Falling below $68 would invalidate the trend and prices would head for $64.24, the intraday low on May 20, Ross said.
Crude oil for July delivery rose 28 cents, or 0.4 percent, to settle at $72.86 a barrel yesterday on the New York Mercantile Exchange.