Crude may touch $58-60; US dollar, inventory data eyed

MUMBAI: After nose-diving from a peak of $147 to $ 33 per barrel, crude oil is again displaying a good show of strength. The US crude oil future
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was trading above $54 a barrel, to a five month high, on improved optimism about an economic recovery. Encouraging data from China and US housing and construction data fuelled hopes that the US economy is stabilizing.

“Crude oil has finally breached the long consolidation pattern on good volumes. Crude closed positive on a month-on-month basis, indicating the continuation of ongoing bullish trend. The momentum is supporting bulls, as the KST cycle turned positive on the daily chart and the same is already positive on the weekly chart,” said a report of Sharekhan.

According to Sameer Mehta, analyst at Connoisseur Wealth Management, “West Texas Crude has breakout above the flag continuation pattern. This upward breakout would offer a target of $70. Downward breakout, though less likely, but would test primary support at $35.”

“The likely target of this current up-move is initially the recent swing high-around $54.65. Once that is breached, crude could test $58-60, which is 23.6% retracement of the entire fall from its all-time high. On the downside, $48 will act as immediate resistance,” Sharekhan added in report.