Key Macro Economic Indicators: How Do They Impact Oil?

The US (SPY) (VOO) consumer sentiment index was 94.3 in June’s preliminary reading, according to the University of Michigan survey released on June 10, 2016. However, the expectation was about 94. The consumer sentiment index coming in higher than expectations indicates some positivity with consumers.

US consumer sentiment is one of the most important economic data points that reflects the state of the economy. Improved consumer sentiment could impact the timing of the next rate hike. It could impact the US Dollar Index (UUP). In turn, this would impact crude oil prices.

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 impacted 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.