Oil Price Spike Likely 'Within Months': Charts Pro

An oil price spike is likely this year as 10-year volatility is below average and geopolitical risks are not properly priced in, Ron William, a technical strategist at Mig Bank, told CNBC.com.

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Brent crude prices slipped on Thursday on worries that a second Greek bailout could be postponed. They hit a six-month high in the previous session after Iran announced progress on its nuclear facilities.

Reports that Iran had stopped oil exports to six European countries also contributed to the spike in price, but they were denied by the oil ministry later on Wednesday.

"From a market perspective, there is very little geopolitical risk priced into the market," William said in an interview.

"Historical oil volatility over the last 10 years shows that oil spikes are regular or cyclical. They happen every year or so, but of course the degree of the price spike varies," he said, adding that volatility in oil is trading below its 10-year average at the moment.

"From just a pure trading perspective, that suggests a growing probability of a price spike within months," William said.

Since January 25, when the European Union announced a July 1 deadline to impose an embargo on imports of Iranian crude, the price held in range, but that is about to change, according to William.

For West Texas Intermediate oil, $100 a barrel is the key psychological level, he said.

"Technically I think WTI is likely to have short-term weakness into key support at $90 but then thereafter a growing upside risk of a challenge of the April 2011 peak, roughly $114."

"It would be very positive for gold, and that ties in with a cycle view that I have for gold going into the summer period of this year. It would be negative for equity markets, potentially negative for the US dollar," William said.

But other trading experts disagree. Dennis Gartman, of The Gartman Letter, said the world was facing an oversupply of energy in the very near future.

"There may be trouble in the Persian Gulf or one of the other 'hot spots' around the world, but there is no tightness of supply given the huge new finds of oil and nat-gas," Gartman said.