Crude prices flat at $72, may see sharp drop

1 September 2010

Written by Bob Burton

Crude oil prices were trading close to yesterday's (August 31st) settle price of $71.92 a barrel on the New York Mercantile Exchange this morning, but analysts expect further declines.

Speaking to Bloomberg, Macneil Murray, a commodities analyst at Barclays Capital, said that unless crude prices break above a "pivot high" of $76.47 a barrel, the recent downtrend could push prices as low as $63 a barrel.

Market analysts use technical datasets to forecast likely price movements, and the Barclays Capital's prediction is based on the assumption that price trends will mimic declines seen in recent weeks.

The $76.47-a-barrel pivot high marks the low point of the downward price movement seen in mid-August, which resulted in a nine per cent drop in prices.

"Absent a close above $76.47, I think you'll maintain the downtrend," said Mr Murray, explaining that prices will first test the $70-a-barrel mark before potentially falling as low as $63 a barrel.

Heating oil prices were also flat this morning, seeing marginal gains to trade at $2 a gallon at 02:59 Central Standard Time.

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