NEW YORK ( TheStreet) -- Oil prices were rebounding after a bullish price forecast by Barclays pushed them above their 200-day moving average and triggered a bout of technical buying.
West Texas Intermediate light sweet crude oil for August delivery was popping by $1.83 to $96.77 a barrel, after breaking above the 200-day moving average for the August contract at $96.18. The August Brent crude contract was up $1.34 to $113.11, though exhibiting a smaller percentage gain that the WTI.
"The market has been looking for this technical breakthrough," said Addison Armstrong, Tradition Energy's senior market research director, of algorithmic traders. "Once that level was triggered, we saw some good buying."
The analyst says this is the first time the August contract has traded above the 200-day moving average since Jun. 15.
Barclays analysts tell their clients that they have raised their 2012 Brent crude oil forecast by $10 to $115 a barrel and 2012 forecast for U.S. light sweet crude oil by $4 to $110, citing a reduction in spare capacity. The analysts say that their projection for Brent crude prices remain unchanged at $112 in 2011, but have cut their U.S. crude price forecast by $6 to $100.
The U.S. dollar was ahead by 0.3% to $74.47 Tuesday, and Armstrong said if the dollar was weaker, oil prices would have been even stronger in the intraday.
"There are a lot of bulls out there that think that the cracks in the Saudi reserve capacity statements will start to show sooner rather than later," added SEB Commodity Research's commodity strategist Filip Petersson.
Still, Petersson himself has a less rosy view on oil prices.
"With the Greek bailout 2.0 starting to fall apart again, indications of an approaching Chinese interest rate hike and dollar strength, I do not see that much to be bullish about," he said. "Rumors that Gaddafi is starting to think about giving up should also be slightly bearish."
SEB Commodity Research's technical team was neutral on Brent this morning.
Citi Futures Perspective's energy analyst Tim Evans says meanwhile that at some point the spread between Brent and WTI will narrow as oil traders begin to feel that Brent is too expensive vs. the WTI.
"Traders may also want to ponder why gasoline is down on the day -- possibly because consumer demand is not that strong," Evans added. Gasoline prices opened slightly lower Tuesday.
Separately, natural gas futures for August delivery were trading sideways at $4.308 per million British thermal units, weighed down by slightly disappointing economic news.
The Commerce Department reported that factory orders for May rose 0.8%, slightly below economists' expectations, but
from a 0.9% drop in orders for April. The rise in orders follows better-than-expected ISM manufacturing numbers reported last week. Earlier, natural gas futures were popping by 1.1% on anticipation of strong air conditioning needs: Armstrong said it's extremely hot in the southwest, and that heat will start to move to the Midwest later this week. "The heat will really penetrate the Midwest in the next days," though the Northeast should have largely normal temperatures over the next two weeks, he said.
Oil and gas companies were trading mixed.
(XOM - Get Report)
was flat at $81.97 as the oil giant tried to get to areas along the Yellowstone River
by the crude spilled from a company pipeline.
(MRO - Get Report)
was rising by 2.2% to $33.66,
(CHK - Get Report)
was up 0.8% to $30.33 and
Kinder Morgan Energy Partners LP
was up 0.1% to $72.97.
-- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: