Crude oil prices heading for record highs, says Bank of America analyst

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Crude oil prices heading for record highs, says Bank of America analyst

The crude oil prices are heading for record highs as commodity traders rotate out of oil, according to technical analysis conducted by the Bank of America.

U.S. copper futures traded at CME Group on Wednesday increased to $4.5205 and 19.15 cents per pound, breaking two key resistance levels to move to a new 50-day high of the week. At the same time, West Texas Intermediate crude oil hit the bank s price target of $81 a barrel.

We think a wholesale commodity rotation is underway in favor of reducing oil longs in exchange for copper longs, Bank of America Technical Strategist Paul Ciana wrote.

He says copper moving above $4,000 for the week signals a move into the range of $488 to $500. A breakout above this level would be the start of a multi-year upcycle with the potential to reach $733.

A technical breakout in copper would align with the fundamentals.

An Associated Builders and Contractors report released earlier this week indicated that a growing number of contractors are indicating shortages of materials like copper. Supply chain bottlenecks and labor shortages caused by COVID - 19 pandemic have boosted copper prices this year by 27%. These gains trail the 13% gain in WTI crude oil.

Ciana says oil prices are flashing some corrective patterns and signals in near term.

The lack of buyers above $80 suggests some hesitation from bulls, according to Ciana. He sees prices fall to support in the $76.50 area but warns that a deeper correction into the $65 to $68 range could occur.

We remain in the long term bull camp, Ciana said.