(Bloomberg) -- Crude oil’s rally may reach $78 a barrel should prices close above their 200-day moving average, according to technical analysis by PVM Oil Associates Ltd. The July crude contract on the New York Mercantile Exchange rose to its 200-day mean on May 29, a signal that prices may keep rising, PVM said in a report today. If the contract settles above the rolling average, currently around $66.39 a barrel, crude may proceed to $78.40, the broker said.“There will doubtless by the odd nasty dip on the way higher, but there is a bullish technical backdrop to the market,” London-based PVM Director Robin Bieber said in the report. “The contracts look like they are shaping up for a move to their long-term objectives.”Oil for July settlement last traded at $67.73 a barrel as of 10:26 a.m. London time, having gained 30 percent last month on speculation the global economy is emerging from recession. A close above the 200-day average will first open the way for a move to $76.28, with the potential for a subsequent move to “just above $78,” according to PVM.
On May 7, PVM predicted that oil would rise to $62.65 a barrel in New York as the market retraced part of the 10-year rally that extended from 1998 to 2008, three weeks before crude reached that point.“It’s been a logical progression,” Bieber said in a telephone interview. “In early May it looked like we were going to $62.65, then the next target was the 200-day moving average, and this is the spring-board for the last leg up in this rally.”Contracts for heating oil and gasoline also have potential for further gains if they remain above their five-day moving averages, the report added. July gasoline, currently at 192.89 cents a gallon, can rise to 197.35 if it holds above long-term support points at 192.84 and 187.22, PVM said.
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