By Grant Smith
May 8 (Bloomberg) -- Crude oil is set to reach $62.65 a barrel “in the near future” and rally to $78 within six months as prices retrace the surge that started in 1998, according to technical analysis by PVM Oil Associates Ltd.
Oil is on the brink of breaking through resistance indicated by its climb from a low of $10.35 in December 1998 to an all-time peak of $147.27 last July, PVM said. If oil reaches $62.65, that is equivalent to 38.2 percent of the 10-year rally, a milestone in the “Fibonacci” sequences that suggests additional gains are likely, according to the London-based firm.
“I’m certain we’ll get to the first correction point at $62.65 in the near future,” PVM Director Robin Bieber said by telephone. “The market has been moving into a position from where it can start to attack the higher correction points.”
Oil for June delivery traded as high as $58.57 yesterday on the New York Mercantile Exchange, the most since Nov. 17.
Gains of 38.2 percent and 50 percent are significant in the so-called Fibonacci sequence, technical analysts say. They use the ratios, sometimes known as the golden mean, to find points of support or resistance as prices retrace rallies or declines.
PVM forecast March 26 that oil would fall to $48.55 a barrel after prices failed to close above their five-day moving average. Crude prices declined to that level two days later.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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