Patton points to technical bottoms (see “Failed retest” below) that were seen in crude oil on Oct. 4, 2011 and June 28, 2012. “In early November we got to $84, but we didn’t get anywhere near [those two lows]. That’s something important from a technical standpoint to see that there really is support below $79.”
Higher West Texas intermediate (WTI) and Brent crude oil prices also are the forecast of INTL FC Stone Analyst Edward Meir. “Beyond January we should have a pretty decent market,” he says. “It’s not going to be a runaway bull market, but there will be higher trading ranges for these complexes, mainly because U.S. growth should pick up.”
Recent lack of significant domestic energy demand growth when coupled with the U.S. steadily becoming self-sufficient in energy production can be viewed as factors keeping price spikes in check, according to Mike Zarembski, manager of futures trading for optionsXpress. “However, we have not seen prices move significantly lower given the above average inventories of oil in the U.S. because of a ‘permanent’ risk premium market participants have placed on oil prices due to possible output disruptions by major producing countries,” Zarembski says.