Fed Building Crude oil has reached a critical technical level, which is likely to test the resolve of the bulls to push prices higher. The bulls have a favorable tailwind with production outages reducing the supply glut. Till about two weeks ago, the drop in the U.S. dollar was also supportive of the crude oil prices, but since then, the dollar has recovered, putting pressure on the crude oil prices. The U.S. dollar and the various commodities have an inverse correlation. The chart below shows the correlation between crude and the U.S. dollar index for the past 12 years. (Click to enlarge) The chart shows a clear inverse correlation between the two, especially when there is a sustained trend. From 2003 to 2008, the dollar was in a sustained bear trend, during which, crude oil witnessed one of its strongest bull runs. When the dollar formed a bottom, crude […]