For the past few days Oil rose with $5 per barrel, which was almost a 7% increase from the low point of $67. This cheaper price appears as a strong support as it was tested a number of times over the past few weeks and it remained. It is a clear indication that demand exceeds supply at those levels and the price jumps. In addition, historically speaking the summer months have usually been in favour of oil due the increased demand from consumers.

Obviously, Oil is a highly political asset. When the price is too low, OPEC cuts supply with the idea to drive the prices higher. An indeed, they announced further cuts, which is taken positively by investors. Those cuts are taking place in July and this $5 jump is mostly influenced by this decision. Its not impossible to see this growth extended.

Technical analysis however tell us a different story. Looking at the daily Alligator we can tell Oil is in a down trend, because all 3 EMAs point south. Yes, $5 is a big jump and the price is approaching the 50 day EMA, but its still below it. Demand has increased over the past few days and this has also driven the oscillators higher. To see our anticipation about changes in the Oil prices, please visit out Go Premium section.