Brent to see support at $102.5/bbl: Barratt

Jonathan Barratt, chief executive officer, barrattsbulletin.com says Brent crude has a good support at USD 102.50 per barrel. Brent today rose to USD 105.58 per barrel, after dropping to an eight-month low last week.

Oil prices are expected to be trading in a range this week on the back of economic data from China. However, Barratt believes if Brent crude breaches this support of USD 102.50 per barrel, then it may dip five to six percent. On the West Texas (WT) front, Barratt expects a level of USD 92.50 and a resistance around USD 98.50 per barrel.

"That is where the market has been for sometime. While we are trading at the lower end, if it breaks it, then, there will be some significant reason why we will trade lower," he adds in an interview to CNBC-TV18.

Below is the edited transcript of Barratt’s interview to CNBC-TV18.

Q: What have you made of Brent crude that is now below the USD 105 levels and what would be your near-term forecast for Brent now?

A: It is quite interesting what is happening with crude across-the-board, both West Texas (WT) and Brent. It seems as if the markets realised that with all the inventories that they have and the continuous growth of these inventories, the crude levels should not be so high. As such, the markets are seeing quite of lot of pressure, quite a lot of sales and there is more to come.

Q: From USD 105, do you expect it to go even into double digits for Brent?

A: It is going to be quite interesting. We have a got very good support at USD 102.50. If we do get a break of USD 102.50, then we can probably see about 5-6 percent decline from that level. These are very crucial support levels which we are coming to and if the market does happen to nudge through those levels, then we could be in for quite some significant losses.

Q: What is the range that you are looking at for crude? If USD 102 is the support, what is the resistance?

A: Where we are, USD 102-102.50 is a good support. The topside resistance would have to be around USD 110-110 level. Similarly on the West Texas, we would look at USD 92.50 and also a resistance around USD 98.50. That is where the market has been for sometime. While we are trading at the lower end, if it breaks there, there will be some significant reason why we will then trade lower.

Q: There was a smart bounce back in gold from USD 1,540 levels all the way to USD 1,575 at the moment. Is USD 1,540 a well-protected support level for gold or do you think this pullback is temporary and we are going to plumb newer depths?

A: This is the third time we have been down at that level and we have bounced back every time. So, I am quite supportive of gold to remain in a range, but if it does get lower to that USD 1,540-1,550, then I would like to buy it. If it breaks USD 1,525 which is my major level of support, then that will put in question the bullish nature that we have had for the last couple of years. So, it is quite critical that we stay here and if it does, which I hopefully do because I am long, we look forward to higher prices.

Q: What would be the higher price that you are looking at for gold? You spoke about it being in a range?

A: I think generally USD 1,620-1,640 is tough resistance. I would like to see it get to that level. It might take a little bit of time because that has been in a range, but first of all USD 1,600 resistance than USD 1,620.