Crude oil prices may fall to the mid- $40s, after failing to sustain a move above $60 a barrel last week, according to Citi FX technical analysts.
Oil’s rally stalled at a six-month high of $60.08 a barrel on May 12, after rising 79 percent from a low of $33.55 three months earlier. It also failed to break $60 in a 4.8 percent rally yesterday.
“Crude faltered at the psychological $60 level, and momentum has turned down, suggesting the danger of a shorter- term correction,” said Tom Fitzpatrick, chief technical analyst at Citi FX, part of Citigroup Capital Markets in New York, in a report co-written with London-based analyst Shyam Devani.
Oil has “good support” at $54.50 to $55 a barrel, in line with the futures contract’s high of $54.66 a barrel on March 26. Further support lies at $50 to $50.50 a barrel, a range that encompasses crude’s highs in December and January.
Oil for June delivery rose $2.69 to settle at $59.03 a barrel yesterday on the New York Mercantile Exchange. It dropped 3.9 percent last week, the first decline since the week ended April 17. The June contract expires at the close of floor trading today. The more-active July contract increased by $2.59, or 4.5 percent, yesterday to $59.59 a barrel.
Technical analysts use historical chart patterns to predict potential future price movements.