Jan. 14 (Bloomberg) -- Crude oil may surge to $117 a barrel by the end of the year if it can break through resistance at $98, according to technical analysis by brokerage Auerbach Grayson.
Futures reached highs of about $98 in November 2007 and January 2008, a so-called double top that corresponds to the starting point for a Fibonacci retracement study, said Richard Ross, a technical analyst with the New York brokerage. Ross omitted the “spike” above $100 to a record $147.27 a barrel in July 2008 from the calculations.
“I think we’re going to test that mini double top from 2007 and 2008,” he said. “If we can take that out, it sets the stage for the next leg up.”
Oil futures may reach $98 by the end of the first quarter, then test technical resistance at $109.50 and around $117, prices that correspond with Fibonacci levels that are 23.6 percent and 38.2 percent above the initial target, Ross said. Oil has support at about $87, a 23.6 percent retracement from $98, and then at around $84 and $80, he said.
Oil for February delivery fell 46 cents, or 0.5 percent, to settle at $91.40 a barrel yesterday on the New York Mercantile Exchange. Prices have risen 15 percent in the past year.
Technical analysts use historical chart patterns and tools such as the Fibonacci sequence to predict potential future price movements.
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