Oil may fall toward $80 a barrel as prices failed to close above the 50-day moving average for a seventh day, according to technical analysis from EOXLive.
Oil futures in New York settled below the average on Dec. 5 and have since traded under it, indicating that oil is facing pressure to breach the average, said Tom Pawlicki, director of market research at the Chicago-based commodity-trading firm. Prices may move toward the November low of $84.05, and a break below that level will probably send the futures to $80, he said.
“We are going to continue to see pressure around the 50-day moving average area,” he said. “Right now we have a target at $84.05 but once that’s removed then $80 comes into play.”
When futures breached the average on Sept. 19, prices dropped from a intraday high of $96.17 to $84.05 on Nov. 7.
Oil for January delivery slid 88 cents, or 1 percent, to settle at $85.89 a barrel yesterday on the New York Mercantile Exchange. Futures have dropped 13 percent this year.