Brent Crude Blocked by Resistance at $113: Technical Analysis

Brent crude futures will struggle to advance past the combined barrier of a one-year resistance line and a downward channel at $112.82 a barrel, according to technical analysis by Societe Generale SA.

Brent, trading at about $110 a barrel today on the ICE Futures Europe exchange, has been capped since January 2012 by a downward-sloping line, which connects peaks reached in the first and fourth quarters of last year. A downward channel, which has bound prices since mid-September, is also preventing the North Sea crude from surpassing $112.82, Societe Generale said.

“Brent remains overall range-bound,” said Stephanie Aymes. “Any upside seems limited by the declining resistance line, which has been taking shape since the January 2012 tops.”

The pattern, which has developed over the past four months, resembles a previous downward channel that lasted from the second quarter of 2011 through to the first quarter of 2012, Aymes said. Brent lost 9.5 percent from April 1 2011 to the end of that year.

While Brent is unlikely to rally, the commodity is also being supported at about $107.30 by a short-term upward channel that has bound prices since early November, according to Societe Generale.