U.S. oil may rise to $72.36 per barrel in Q4

• U.S. oil may rise to $72.36 per barrel in the fourth quarter.
• This cycle has been well controlled by a set of retracements on the preceding downtrend from the July 2008 high of $147.27 to $26.05.

SINGAPORE: U.S. oil may rise to $72.36 per barrel in the fourth quarter, as suggested by its wave pattern and a Fibonacci ratio analysis.

The contract could be riding on a wave C from $42.36, which is the third wave of a three-wave cycle from the February 2016 low of $26.05.

This cycle has been well controlled by a set of retracements on the preceding downtrend from the July 2008 high of $147.27 to $26.05.

The wave A ended around the 38.2% level of $72.36 while the wave B completed around the 14.6% level at $43.75. The 23.6% level works as a strong support, around which, oil has been consolidating for a few months.

Compared to the wave A, the current wave C looks too short to complete. Three smaller waves may make up the wave C. The third wave labelled c could have started from the August low of $50.52.

This wave may travel into the range of $73.70-$93.07, formed by the 61.8% and the 100% projection levels of the wave C. Even if this presumed wave C turns out to be an extended wave B, oil is still likely to gain more into the range of $72.36-$73.70, as the wave B may adopt a flat wave mode.

The bullish view will have to reviewed, if oil fails to hold above the key support zone of $49.76-$54.66, as a break below $49.76 will simply mean a resumption of the downtrend towards $26.05-$34.54 range.

* The analysis is based on delayed data, prediction may be affected. Charts are not available in reports received in email box through "Alert". To get charts, use the news code of  to retrieve the original reports.

** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.