NEWYORK, Mar. 18 -- Crude oil will have $88 a barrel as the next "port of call" if the market this week can surpass technical chart resistance above $83, according to National Australia Bank Ltd.
Oil ended yesterday's trading at $82.93 a barrel, 25 cents shy of a 14-month settlement high reached in January. A breach of that resistance will strengthen the current rally, said Gordon Manning, a Sydney-based technical analyst at Australia's fourth-largest bank.
"There's a far greater risk that this thing breaks to the upside," Manning said today in a telephone interview. "If this really breaks, we'll at least go up to the $88 target -- that would be my first port of call."
Crude oil rose for a second day yesterday after the Energy Department posted declines in fuel stockpiles in the U.S., the world's biggest energy consumer. The Organization of Petroleum Exporting Countries also voted against raising output targets to cool prices. The contract for April delivery was at $82.47 a barrel in electronic trading on the New York Mercantile Exchange, down 46 cents, at 11:27 a.m. Singapore time. Futures have gained 4 percent in 2010.
Oil has advanced this month even as the market failed to string together more than two days of gains. This proves oil has "held its support pretty well," according to Manning, who correctly predicted on March 3 that oil will rise above $83 a barrel.
"You can argue in some ways we've gone sideways since last November, but to me it should get a bit of fresh air and head up," he said. "It really hasn't had a convincing break to the upside but I think we'll have a clearer view by the end of this week."
Oil last traded at $88 a barrel on Oct. 9, 2008, about halfway along the descent from an all-time high above $147 in July that year to below $33 in December.