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Sep 06, 2010
Oil Rises Back Above 200-Day Moving Average: Technical Analysis Feb 08, 2010
By Grant Smith
Feb. 8 (Bloomberg) -- Crude oil rose back above its 200-day moving average after falling below this indicator for the first time since September 2008.
Oil dipped below the 200-day mean on Feb. 5, when prices plunged in New York to their lowest levels in seven weeks. It last dropped below that threshold in September 2008 as the financial crisis hit global markets, and stayed under it until May 2009. Volumes for all West Texas Intermediate contracts on the New York Mercantile Exchange on Feb. 5 were at their second- highest level since WTI trading on Nymex began in 1983.
Still, crude prices did not settle below the 200-day average on Feb. 5 and were last trading above it. Futures for March delivery were at $71.27 a barrel on the Nymex as of 12:46 p.m. London time, and the 200-day measure at $70.72.
“We’re on the 200-day, but we haven’t closed below it,” Karen Jones, technical analyst with Commerzbank AG said in an interview. “Now there’s a chance of a corrective rebound in which to sell.”
Combined volumes for WTI oil across all months totaled 1.045 million contracts on Feb. 5, the second-highest after a record of 1.09 million on June 6, 2008. Between those two dates, volumes exceeded 1 million contracts only twice, in February 2009 and December 2009.
The front-month future lost 2.7 percent to $71.19 a barrel on Feb. 5, the lowest settlement price since Dec. 15. Traders often view sessions in which volumes are higher as more indicative of the market’s direction.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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