US dollar index
The US dollar index depreciated to its lowest level in the last eight months due to expectations of the Federal Reserve’s slowing pace for a rate hike. The US dollar index depreciated to 93.75 on April 11, 2016. Secondly, the strong commodity rally also fueled optimism in the crude oil market and boosted crude oil prices. Gold hit the highest level in three weeks. Silver and platinum also rose by 2% on April 11, 2016. Gasoline prices rallied more than 3% on the same day. Finally, short covering also supported the crude oil price rally.
Crude oil prices have been on a roller coaster ride. WTI oil prices have rallied 52% since their lows from February 2016. Brent crude oil prices hit a four-month high. Prices rallied due to the upcoming oil producer meeting, rising gasoline demand, the depreciating US dollar, and expectations of slowing US crude oil production. However, the near-record US crude oil inventories also play a vital role in driving crude oil prices. To learn more, read the next two parts of the series.
The volatility in crude oil prices affects US oil producers like QEP Resources (QEP), WPX Energy (WPX), Swift Energy (SFY), and Carrizo Oil & Gas (CRZO). The volatility also affects ETFs and ETNs like the Guggenheim S&P 500 Equal Weight Energy (RYE), the PowerShares DWA Energy Momentum (PXI), the United States Brent Oil (BNO), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), and the United States 12 Month Oil (USL).
In the next part of the series, we’ll cover US crude oil inventory.