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`Bear Flag' Signals a Decline in Oil Price to Near $60: Technical Analysis
Crude oil is set for a drop to near $60 a barrel, extending a descent started in May, according to a technical analysis by independent analyst Jim Stellakis.
“Last month’s breakdown in crude oil is continuing the longer-term bearish pattern which was started by the May decline,” Stellakis said. The bear flag pattern is signaled after a break occurs below a rising trading range.
Crude oil for October delivery fell as much as 1.1 percent before gaining $1.08 to settle at $74.99 a barrel on the New York Mercantile Exchange. Prices for October dropped 9.4 percent in August, pushing futures below the support level. The contract lost $14.05, or 15 percent, in May.
The price target, expected over the next couple of months, was derived by taking the length of the initial decline in May and projecting it lower from the support level, Stellakis said.
“Across commodities, energy has the weakest technical profile,” he said. “The continued weak price action indicates supply is still greater than demand.”
To contact the reporter on this story: Paul Burkhardt in New York at pburkhardt@bloomberg.net.
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