A Look at Key Economic Indicators and Crude Oil

US (SPY) (VOO) non-farm payrolls increased 38,000 in May on a month-over-month basis, according to the U.S. Bureau of Labor Statistics report of June 3, 2016. However, the expectation was about 164,000. The big miss in the payroll number could delay the timing of the next rate hike. It hints at a weakness in the US economy.

The US payroll number is one of the most important economic data points that impacts interest rate decisions. The Market’s expectation of a delay in a rate hike could weaken the US Dollar Index (UUP), which could support crude oil prices. However, weak Market sentiment around weak demand could pressure crude oil prices.

A rise in the dollar index could affect crude oil negatively. To find out more, read What’s the Correlation between Crude Oil and the Dollar Index?

Our analysis here is important for crude oil–weighted stocks such as Abraxas Petroleum (AXAS), Triangle Petroleum (TPLM), and Denbury Resources (DNR). Also impacted by economic data and the correlation of crude oil prices with the US Dollar Index are ETFs such as 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.