Bulls are backing oil price breakthrough

After a period of relative stability in oil prices, a slew of market participants are growing increasingly upbeat on a turnaround for the commodity, predicting a sustained rally in the near term.

The price of oil collapsed from near $120 a barrel in June last year to a low of around $45 a barrel in January. It has since bounced back to around the $60-a-barrel level. Analysts are now contemplating what the new equilibrium should be for the commodity, with a slew of market watchers predicting it could climb to around $70 before the end of the year.

“What we are seeing now is improvement, suggesting a recovery within the longer term downtrend…I’m short-term bullish on Brent,” Roelof van den Akker, a chartist at ING Wholesale Banking, told CNBC Friday. He expects the price of Brent crude to reach $72.40 a barrel in the near future.

“I would not be surprised by further upside potential in Brent oil towards $78 to $80,” he added.

After a period of relative stability in oil prices, a slew of market participants are growing increasingly upbeat on a turnaround for the commodity, predicting a sustained rally in the near term.

The price of oil collapsed from near $120 a barrel in June last year to a low of around $45 a barrel in January. It has since bounced back to around the $60-a-barrel level. Analysts are now contemplating what the new equilibrium should be for the commodity, with a slew of market watchers predicting it could climb to around $70 before the end of the year.

“What we are seeing now is improvement, suggesting a recovery within the longer term downtrend…I’m short-term bullish on Brent,” Roelof van den Akker, a chartist at ING Wholesale Banking, told CNBC Friday. He expects the price of Brent crude to reach $72.40 a barrel in the near future.

“I would not be surprised by further upside potential in Brent oil towards $78 to $80,” he added.

And van den Akker is not alone. Michael Wittner, global head of oil research at Societe Generale, upgraded his own price targets for oil Friday morning, following sizeable gains in the previous session.

On Thursday, both Brent and WTI rallied to new 2015 highs on the back of tensions in the Middle East, a pickup in global demand and the expectation that the U.S. will continue to curb production.

On Friday morning, Brent crude for June delivery was up 70 cents at $65.55 a barrel by 10:00 a.m. London time. U.S. crude for June delivery was flat for the session at $57.75 a barrel.

Wittner now sees the “average” price of Brent being $58 a barrel in the second quarter of 2015, $60 in the third quarter and $65 in the fourth quarter.

“U.S. crude production has reached a plateau and is expected to decline soon in May,” he said in the note.

CNBC

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.