By Yee Kai Pin July 17 (Bloomberg) -- Crude oil remains in a downtrend and may slip toward its lower Bollinger Band just above $58 a barrel as traders test the resilience of technical support levels, said the head of Cameron Hanover Inc. Oil traded above $62 a barrel this week as buyers stepped in after futures, which dropped July 13 to an eight-week low of $58.32, were deemed undervalued, said Peter Beutel, president of the New Canaan, Connecticut-based trading advisory firm. The latest gains may be reversed because of doubts about the strength of the global economic recovery. “Prices were quite oversold earlier this week, but have now overcome that,” Beutel said in e-mailed comments. “At some point, I expect that we will see another test of the recent lows.” Oil is poised for its first weekly gain since June 12 after U.S. stocks climbed for a fourth day, the longest winning streak in six weeks. Futures have advanced 39 percent this year partly because of speculation demand for fuels will rise when the recession ends. Oil for August delivery on the New York Mercantile Exchange, a contract which expires July 21, fell 43 cents to $61.59 a barrel at 10:41 a.m. Singapore time. Technical traders may test support along the lower Bollinger Band, which plots price targets based on volatility, a level that shows as around $58.30 a barrel on today’s continuation chart. That price almost coincides with a 50 percent Fibonacci retracement of the gains posted to the June 30 high of $73.38 from the April 21 low of $43.83. A settlement below that area may trigger a fresh wave of selling, potentially taking oil toward $50 a barrel, a level last traded at the end of April, said Beutel. “The major support now is at $58.30-$58.70,” he said. “A break under that would point to $50.00-$51.00.” If oil holds above its support in the coming days, futures will rise further from current levels and may have a chance to break out of a five-week descending channel. “On the upside, there is good resistance in the $64.50- $65.30 area,” said Beutel. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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