Crude oil price to hit $78 within 6 months

Report from PVM Oil Associates says crude price on verge of breaking through resistance level.
By Martin Morris
Sat 09 May 2009 11:29 PM

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 new technical analysis from PVM Oil Associates Ltd.The report, carried by news agency Bloomberg, said 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.

If oil reaches $62.65, i.e. equivalent to 38.2 percent of the 10-year rally - ''Fibonacci'' sequences suggest additional gains are likely, according to the London-based firm.

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.

''I’m certain we’ll get to the first correction point at $62.65 in the near future''' PVM Director Robin Bieber told Bloomberg by telephone. ''The market has been moving into a position from where it can start to attack the higher correction points.''

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.

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