Oil soared above $60 yesterday, though its eased today after the release of bad housing news. The next move for oil might not be back to $40, according to a technical analysis by Citi, since it couldn’t break above $60.
However, RBC Capital and Barclay’s Capital put out notes (via Alphaville) that point out the correlation between a weakening dollar and a rise in the price of oil. As we can see in the chart below from RBC, when the dollar falls, oil rises. If we expect the dollar to continue to weaken then we should prepare ourselves for the price of oil to rise.
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