AnalysisOil continued its upside trend and gains for the eight consecutive session on signs of global recovery. Last Friday, oil touched its highest level in a year after reports released earlier showing that U.S. gasoline and stockpiles slipped more than expectations. The EIA and API reports released last week confirmed the clear signs of recovery, suggesting stronger future demand on energy.


Crude prices climbed at the end of last week despite the downbeat earnings posted by Bank of America and General Electric. Other U.S. companies such as Apple and Caterpillar will release their earnings this week along with important U.S. housing data.


Meanwhile, investors are buying oil after the improvement seen recently from large economies indicating that the worst is over. Prices augmented nearly 23% in the last 90 days. The contract on Friday surged $0.95 closing at $78.53, while recording a high of $78.75 per barrel and a low of $76.82 per barrel.      


What helped prices to boost faster is the weak dollar that slipped today after rebounding slightly on Friday. The dollar index, which tracks the dollar's movements against a basket of major currencies, fell roughly 7% this year and touched its lowest level in 14 months last week. Currently, the index is at 75.47 from the opening at 75.70.


Another important factor is the bounce in stock markets which gave an impetus to oil prices as Dow Jones breached the 10,000 points for the first in a year last week. However, U.S. equities retreated on Friday after the worse-than-expected earnings and the grim U.S. confidence report. Today, there is lack of fundamentals from major economies and therefore movements are expected to be merely technical.  


Now, oil is traded at $78.82 recording a high of $79.00 and a low of $78.30. Oil is expected to face a resistance at 82.00, while gaining support at $75.00. Oil is now overbought and therefore a downside correction is expected. Also, it may face downward pressure on expected wave of profit taking by investors after the high levels reached last week.