LONDON, Aug 23 (Reuters) - The two big crude oil futures
contracts traded in the Atlantic basin look set for a third week
of falls and tests of lows seen at the beginning of July, charts
analysts said on Monday.
U.S. light crude oil, also known as West Texas Intermediate
or WTI, and North Sea Brent have both punched through what
looked like solid support levels and are now trading below a
band of resistance in the low $70s per barrel.
This puts them about $10 per barrel below their peaks in the
first week of August, having fallen for 10 of the last 12
working days.
"All the short and medium-term daily, weekly and monthly
moving averages are above the current price action," Tamas Varga
said of WTI, Brent, U.S. heating oil, gas oil and RBOB gasoline
in his daily note to clients of oil brokers PVM.
"This should mean that unless there is a dramatic change in
economic sentiment, the next downside objectives for the coming
weeks are the lows achieved at the beginning of last month, and
after that the lows at the end of May," Varga said.
Olivier Jakob, head of Petromatrix in Zug, Switzerland,
agreed, highlighting the breaking last week of support on the
front-month benchmark WTI chart of the 50 percent Fibonacci
retracement level at $75.70 per barrel.
"Technically, WTI is in trouble. The slope of the five-day
moving average is starting to head south again and the five-day
moving average has become the line of resistance," Jacob said.
"For support, we now have to target the 61.8 percent
Fibonacci at $73.00, or the lows of July at $71.09. If the
support of $71.09l is broken then the next layer of significant
support will move to $65.00," he said.
Edward Meir, senior commodity analyst at brokers MF Global,
said WTI prices seemed to have broken their short-term
upchannel, and now looked like they were heading to the early
July support of $71.09, with $69, the early June low, below that
support level.
Brent was resting at support at the $74 mark, which lay
along a key short-term upchannel that goes back to late May.
"The complex is holding up relatively better than WTI due in
part to the fact that the arb(itrage) has moved in Brent's
favour in recent days," Meir said.
"Despite all this, we suspect that Brent will eventually
break through trendline support, and possibly sink to $71,
roughly equivalent to the $70 level that we expect will hold in
WTI. Resistance is at $77.80."
(Reporting by Christopher Johnson; editing by Sue Thomas)
