In the last six sessions oil rose nearly 20 percent. According to some analysts, the $50 dollar range on crude is more realistic in the short-term than $60. According to Ari Wald, head of technical analysis at Oppenheimer, if oil reaches $50 again soon, then it will likely surpass $60 by 2017. The logic to support this line of thinking would be that there has been a strong reversal in market trends and a weaker U.S. dollar in general.
When you take a look at market trends over the last year or so, you will see that oil has made some big recoveries after dipping down to certain levels. For example, in the month of April WTI bounced back from its two year decline and reached a new 2016 high of $51.67 for the year.
Now that we are experiencing another bounce-back, the question at hand is what is motivating the market currently and will it continue upwards, or will it disregard all of its recent gains?.
According to Morgan Stanley, the correlation between the U.S. dollar and oil prices is becoming more prevalent, especially now that there are less supply disruptions in the news. They report that every time there is a 1 point change on the US Dollar index, it inversely affects the price of oil by approximately $1.50-$2.00.
If fundamentals continue to improve and supply disruptions/world news keep the noise down for a little bit, we may just be able to foresee what will happen next. Fortunately for us, we know better than this and realize that all we can do is analyze the current information at hand and hope for a minimal amount of disruptions.