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Daily Oil Prices 20 Oct 2010

crude oil wti

WTI Oil Chart 20 Oct 2010

Crude oil prices, like many other asset groups in the commodity sector, suffered a sharp sell off yesterday following the news that China had decided to increase its interest rates by 0.25% which took the market by surprise, sending the dollar higher as a result.   Under normal circumstances a rate rise from China, whilst interesting, would hardly have this impact on the market and the only reason is that it came as a surprise and not as a scheduled announcement.  As such we can expect yesterday’s sharp move lower to be reversed in due course as traders and investors take this as an opportunity to buy back into these markets at lower prices, and indeed, this is already happening across the commodity sector this morning with both gold and silver (along with oil) trading higher.  From a technical perspective we now need to see a break and hold above the 9 day moving average at $82.08 per barrel and once above here a close and hold above $84.43 before we move to re-test the high of May at $87.14.  The longer term for daily oil prices still remains bullish and we can fully expect daily prices to achieve $100 per barrel over the next 6 months.

Today is, of course, crude oil inventories which are expected to come in at 1.5m against last month’s fall of -0.4m.

Oil bulls eye $100 per barrel (according to Goldman Sachs)