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US Refinery Demand Outage and Supplies Impact Crude Oil Futures

PART:
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Part 3
US Refinery Demand Outage and Supplies Impact Crude Oil Futures PART 3 OF 6

US Dollar Supported Crude Oil Prices Last Week

US Dollar Index  

The US Dollar Index fell 0.18% to 93.36 on August 18, 2017. The US dollar fell due to the following reasons.

  • There’s political uncertainty in the US due to President Trump’s inability to deliver tax subsidies and infrastructure reforms.
  • There are concerns about lower US inflation in 2017.
  • The S&P 500 (SPY) (SPX-INDEX) fell 0.1% to 2,425.55 on August 18, 2017. SPY has fallen more than 2% in the last two weeks. It also pressured the US dollar.

The PowerShares DB US Dollar Bullish ETF (UUP) tracks the US dollar’s daily performance. It fell 0.33% to $24.21 on August 18, 2017. UUP has fallen 8.5% YTD (year-to-date). Likewise, the US dollar has fallen ~12% YTD.

The US dollar fell due to the following reasons.

  • President Trump hasn’t been able to deliver tax and infrastructure reforms.
  • Traders are concerned about whether the Fed will increase US interest rates again in 2017.

US Dollar Supported Crude Oil Prices Last Week

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US dollar and crude oil  

The US dollar and crude oil prices are inversely related, as you can see in the above chart. A weak US dollar makes crude oil (RYE) (VDE) more economical for oil importers. As a result, it supported crude oil (USO) (UCO) prices last week.

Higher crude oil (SCO) (IEZ) (XLE) prices have a positive impact on oil and gas producers. The energy sector’s top gainers as of August 18, 2017, are mentioned below.

  • Tidewater (TDW) rose 9% to 24.15.
  • Calumet (CLMT) rose 6.5% to 6.55.
  • Isramco (ISRL) rose 5% to 115.7
  • Bristow (BRS) rose 5.6% to 7.7.
  • QEP Resources (QEP) rose 4.5% to 7.44.

US dollar’s high and low  

The US Dollar Index hit a high of 103.8 on January 3, 2017—the highest level in 14 years. In contrast, the US dollar hit 92.7 on July 31, 2017—the lowest level in 13 months.

Impact 

The expectation of a weak dollar in the next six months could benefit crude oil (SCO) (BNO) prices.

In the next part of this series, we’ll analyze crude oil prices movements in the last 18 months.

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