Brent crude, which gained the most in five months in January, may slow its advance in London as prices reach technical resistance starting at $118 a barrel, according to Societe Generale SA.
The North Sea oil, a benchmark grade for more than half the world’s crude, is approaching a downward-sloping trend line that halted rallies in 2011 and 2012, the bank said in its first-quarter outlook. Beyond that resistance level, further price increases may stall around $127, along the top of a range within which futures have traded since mid-2010.
“Brent is drifting higher towards the upper part of the two-year range at $113 and $118 but with a lack of momentum,” Stephanie Aymes, a London-based technical analyst at France’s fourth-largest bank, said in a report e-mailed yesterday. “The steep bullish dynamic since 2008 is broken.”
Global oil prices have risen on speculation a U.S. economic recovery signals demand will increase in the largest crude-consuming nation. The Brent contract for March settlement on the ICE Futures Europe exchange was at $115.83 a barrel, up 28 cents, at 12:56 p.m. Singapore time. Prices rebounded 4 percent last month, the most since August.
The $118-a-barrel resistance target, signaling an area where sell orders may be clustered, is taken from a downtrend line that connects Brent’s monthly candlesticks of July 2008 and May 2011, Societe Generale’s chart shows. Futures last traded at $118 in May 2012.