By Yee Kai Pin Jan. 13 (Bloomberg) -- Crude oil may rebound from its current three-day losing streak, possibly reaching as high as $87.20 a barrel, as long as prices don’t fall below $78, according to Societe Generale SA. Oil is pulling back because its relative strength index shows prices have advanced too rapidly, said Stephanie Aymes, a commodity technical analyst at France’s second-largest bank by market value. Futures ended a 10-day climb on Jan. 7, the longest rally since February 1996. “The 14-day RSI is at resistance, which means that we cannot rule out a pause to the retracement at $78 before turning back up,” London-based Aymes said in e-mailed comments. Crude oil extended its decline in New York after China’s central bank moved yesterday to restrain lending, fanning concern demand in the world’s second-largest energy consumer may be curbed. The contract for February delivery was at $79.83 a barrel in electronic trading on the New York Mercantile Exchange, down 96 cents, or 1.2 percent, at 11:13 a.m. Singapore time. Aymes identified $87.20 a barrel as the top of an “ascending channel” for February futures. Oil this week has fallen before reaching that target because a trend line joining the RSI highs since June coincides with a reading of 70, which indicates prices have risen too quickly. Before any approach to $87.20 a barrel, a level last surpassed Oct. 9, 2008, traders may exit positions at $86.65 and $85.30 to protect profits, Aymes said yesterday in a separate note to clients. “We reduced the bullish conviction” to neutral, the note said. If downside support at $78 a barrel is breached, a decline to $77.95 and $76.80 is possible, Aymes said. In that scenario, prices will still remain within the ascending channel, she said. To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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