(Bloomberg) -- Crude oil is set to rise above $74 a barrel in New York, passing this year’s high, after prices formed an “inside bar” pattern, according to technical analysts at Barclays Capital.The highest and lowest prices on Aug. 4 were within the trading range of the previous day, a formation on a candlestick chart known as an “inside bar” that usually indicates the continuation of a price trend, Barclays analyst MacNeil Curry said in a telephone interview from New York yesterday. A narrowing gap between monthly contracts of Brent crude and a “positive macro backdrop” lend support, he said.
Crude futures for September delivery, which traded as high as $72.02 a barrel yesterday on the New York Mercantile Exchange, rose to a 2009 high of $74.66 a barrel on June 11. The Brent contract in London increased to its highest this year, $74.89, on Aug. 4.“The path of least resistance is higher,” Curry said. “It’s a conglomeration of things: the inside bar, Brent is making new highs, the spreads are trying to consolidate, and the macro backdrop is positive for assets correlated with global growth.”
The upper and lower levels on Aug. 4 for the September crude contract in New York were $70.16 and $71.95, whereas the highs and lows on the previous day $69.09 and $72.20. “The inside bar is when the bar subsequent to a big move is within the previous day’s range,” said Curry. “This usually suggests the continuation of the previous trend, which in this case is an uptrend.”The difference between Brent contracts to be settled in a year’s time and those settling a month from now shrank to $6.22 a barrel yesterday, compared with $11.69 a barrel on March 30. The narrowing of the discount between short- and long-term crude often indicates that an oversupply in the near-term is abating.
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