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How Are Key Macroeconomic Indicators Affecting Oil?

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US consumer sentiment

The US (SPY) (VOO) consumer sentiment index was 93.5 for June’s final reading, according to the University of Michigan survey released on June 24, 2016. However, the expectation was about 94. During May 2016, the reading was 94.7. The lower-than-expected consumer sentiment index indicates consumer concern about the current economic situation.

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How key macroeconomic indicators affect oil

US consumer sentiment is one of the most important economic data points that reflects the state of the economy. Diminished consumer sentiment could impact the timing of the next rate hike as well as the US Dollar Index (UUP), which in turn could affect crude oil prices.

US dollar index and crude oil

A rise in the US dollar index could have a negative impact on crude oil prices. Read What’s the Correlation between Crude Oil and the Dollar Index? to learn more.

Our analysis is important for crude-oil-weighted stocks such as Abraxas Petroleum (AXAS), Triangle Petroleum (TPLM), and Denbury Resources (DNR). ETFs are also affected by economic data and the correlation of crude oil prices with the US dollar index. The ETFs include the Direxion Daily Energy Bear 3X ETF (ERY), the First Trust Energy AlphaDEX ETF (FXN), the United States Brent Oil ETF (BNO), and the United States Oil ETF (USO).

In the next part of this series, we’ll look at the weather forecast and how it could impact natural gas prices.

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