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Daily Oil Prices 29 Sep 2010

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WTI Oil Chart 29 Sep 2010

Daily oil prices continue to trade in a very narrow range characterised in yesterday’s oil trading session by a long leg doji candle which touched $77 per barrel to the upside and $75.50 to the downside before closing at the midpoint.  Yesterday’s price action replicated that of Monday and indeed today seems to be following a similar pattern once again as oil prices oscillate around the $76 per barrel price area.  As such we are now developing a well defined pennant formation on the daily oil chart and given the recent ascending nature of prices to the underside of the pennant, it seems increasingly likely that the impending breakout is likely to come to the upside.  As always the longer this tight price action continues then the more dynamic will be the breakout when it duly arrives and, as such, there are several key price points and technical areas which will signal a step up in the move.  The first of these is a break and hold above the 200 day moving average which is currently sitting at $77.62 per barrel, followed by a break above the potential resistance at $79.95, and finally a break above the $82.97 per barrel high of early August.  Once these stages have been completed then this should provide the requisite platform for a sustained move higher for daily oil prices.

This afternoon, of course sees the release of the crude oil inventories with analysts forecasting a draw of -0.4m.  However, given their record last week when the inventory recorded a build of 1m barrels this forecast needs to be treated with a degree of caution.

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