Crude oil is another of the commodities I expect to perform well this year, and for the last few weeks I have been waiting for a break above the short term resistance at $92.20 per barrel for the WTI market, which was finally breached last week in dramatic style, helped of course by the news in Libya and Egypt. The most dramatic chart is that for the week, with the WTI spot price ending the trading session with a wide spread up candle, and closing on Friday at $98.43 per barrel, having initially pushed through the psychological $100 per barrel earlier in the week.
As such, this is now a significant price move, and following several weeks of sideways price action in the $87 to $92 per barrel area, we now look set for an extended bullish run for the commodity, something I have been forecasting since late last year. Indeed I suggested in a post in November that we should expect to see crude oil break above $100 per barrel in the first quarter of 2011, before moving towards $127 per barrel and beyond in due course.
The technical picture for oil is now extremely bullish, and although we may see a short term pullback early in the week, I expect to see crude oil develop a longer term trend higher for much of 2011, and should the current tensions in the Middle East continue to escalate, then a breach of the $147 high of 2008 is not unlikely, although I believe that we may have to wait until 2012 before this price point is reached. However, once cleared then we can expect to see crude oil move towards the $176 per barrel in the next eighteen months, as I believe we are now seeing the start of an extended and prolonged trend for the energy sector with crude oil leading the way.