Brent has resistance at $107.20/bbl: Jonathan Barratt

Brent crude steadied near USD 106 per barrel as investors looked to Europe for policy easing measures after the US Federal Reserve disappointed on fresh monetary stimulus.

In an interview to CNBC-TV18, Jonathan Barratt, chief executive officer, barrattsbulletin.com says, Brent crude has resistance at USD 107.20 per barrel. "I would like to see break of USD 107.20 per barrel. Once we get that then USD 110 per barrel is just around the corner," he adds. Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra. Q: Where is crude headed now? Brent is a little stubborn at USD 105 to USD 107 per barrel. Do you think there is enough pressure in the slowdown noises to push it below USD 100 per barrel? How would you average this quarter for crude? A: We have seen quite a large lift in the price of Brent and WTI as a result of this stimulus that we are looking to put into the market. After the Fed comments last night, we can rule some of that out. We now lean towards the ECB for stimulus. If we do get that then I think you will find the market quite optimistic. I would see prices high. I am looking for a break on Brent of USD 107.20 per barrel. If that actually happens then I think you will see prices higher. If we don’t get any comment out of the ECB then prices would just come back in the range. But, overall, there has been some encouraging set of news that will suggest the dips will be well supported. Q: What are you expecting from the ECB today? Is it going to be extremely aggressive or do you think that the German central bank yesterday reiterated its stand and pushed the ECB to a corner to make sure that they do not overstep? A: We want to see a line in the sand in terms of stimulus so that we know where we are going. When we do have significant headwinds out of Germany in terms of constitutional challenge for a lot of this stimulus, we only hear about that in mid-September. So, tonight we are going to see a lot more rhetoric. But it’s going to be supportive of stimulus, once we get some outcome out of Germany. I also feel that we might see more talk about the European monetary system (EMS). I think that could be seen as quite constructive to form some form of finance for this recovery, once it starts. So, it’s going to be interesting. But I want to see some positive news from Draghi. _PAGEBREAK_ Q: How firm can crude get in anticipation of this possible stimulus from the Fed, assuming that the ECB does hint something about S&P buying of bonds or something to cheer up the market? Does crude have strength to go up to USD 110 per bbl or beyond? A: I think it does. When you look at it, some of the anecdotal evidence we are seeing over the last week, particularly the consumption in the US were 2.5% and further when you look at the American Petroleum Institute (API) data, do suggest that we are seeing consumption pick-up in the world’s number one economy. As a result of that any form of stimulus or easing or dovish tone by central banks will have two ways. I cannot bring it to USD 110 per barrel. I think combined with the stimulus and continued demand out of the US, I think it’s a real possibility. I would like to see break of USD 107.20 per barrel, that is technically a level of resistance for me. Once we get that then USD 110 per barrel is just around the corner. Q: What about copper? A: We looked at the PMI data, it was relatively steady. It is nice to see that it was steady clearly because the monetary easing, which we have already seen in the terms of the Reserve bank ratio, only occurred one to one-and-a-half months ago. As a result of that, it is going to take time to fuel through the economy. Once it does goes through the economy then we will register some demand for copper. Remember, we have got Northern hemisphere holidays, physical demand is light. But once the holiday is in we see some more stimulus coming through then I think you will see copper prices start to pick up. Technically, they are at low. So, I am looking for copper to trend back through that 8,000 level over the next couple of months.