WTI Set to Fall If It Fails to Top $100: Technical Analys

May 1 (Bloomberg) -- West Texas Intermediate crude may tumble below $80 a barrel if it fails to breach $100, according to technical analysis by Piper Jaffray Cos.

The contract is trading above the 10-, 50- and 200-day moving averages, a signal to buy, said Craig Johnson, technical market strategist with the company in Minneapolis. If crude fails to settle above $100, market sentiment will turn bearish, he said. WTI last breached that level in September on an intraday basis and in May 2012 at settlement.

“The bullish technical case for oil will begin to break down if we can’t recapture $100,” Johnson said in a phone interview yesterday. “If we fail to close above $100 the market is set to move lower, perhaps down to the high $70s.”

The 10-day moving average stood at $90.64 yesterday, while the 50-day was at $92.65 and the 200-day was at $91.85.

The oil market has been trading in a narrowing range for the past three years, while other markets are reaching new highs, Johnson said. It’s now in a “dead zone” and gone from being a leading market to a lagging one, he said.

Crude for June delivery dropped $1.04, or 1.1 percent, to settle at $93.46 yesterday on the New York Mercantile Exchange. Oil rose 1.6 percent to $94.50 a barrel on April 29, the highest settlement since April 10.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net