SINGAPORE: US oil may bounce into a range of $73.66 to $74.38 per barrel, following its stabilization around a support of $71.30. The working support appears to be $70.87. It is indeed the support of $71.30 that played a key role in temporarily stopping the fall and triggering a bounce.
A short falling channel suggests a target of $73.66, which will only be confirmed when oil breaks $72.76.
A very weak bounce may end around $72.76 as well. A break below $71.30 could confirm the continuation of the downtrend towards the $67.49-$68.94 range.
On the daily chart, oil is poised to break a support of $71.76.
This is the fourth time oil is likely to test this key barrier.
US oil may retest support at $72.76
Bulls are unlikely to perform any stunt to maintain the price above this level, in light of the strong bearish momentum accumulated over the past two days.
A drop below the Tuesday low of $70.78 may confirm a break below $71.76.