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US Crude Oil Prices Fall despite the Weak US Dollar

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Crude oil prices  

September WTI (West Texas Intermediate) crude oil futures contracts fell by 1.4% and settled at $39.51 per barrel on August 2, 2016. Brent crude oil futures fell by 0.81% and closed at $41.8 per barrel.

Prices fell ahead of the US crude oil inventory report due to oversupply and weak demand concerns. ETFs such as the United States Oil ETF (USO) and the ProShares Ultra Bloomberg Crude Oil (UCO) fell by 0.85% and 1.9%, respectively, on August 2, 2016.

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US crude oil inventory report  

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on August 3, 2016, at 10:30 AM EST. The API (American Petroleum Institute) released its weekly crude oil inventory report on August 2, 2016. For more on the reports, read Part 8 of the series.

US dollar index and US equities

The US Dollar Index depreciated to a six-week low on August 2, 2016. The US dollar and crude oil are usually inversely related. The weaker dollar makes crude oil more affordable for oil-importing countries. The depreciating dollar limited the downside for crude oil prices on August 2, 2016.

However, US equities fell to a three-week low on August 2, 2016. US equities’ bearish momentum weighed on crude oil prices on the same day.

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Crude oil prices are trading close to four-month lows. Lower crude oil prices have a negative impact on oil producers’ earnings such as Comstock Resources (CRK) and Bonanza Creek Energy (BCEI). They also impact ETFs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Direxion Daily Energy Bear 3x (ERY).

What’s in this series?  

US crude oil prices have risen more than 50% since their lows in February 2016. Read the next four parts of this series for updates on bullish crude oil drivers. On the other hand, crude oil prices have fallen almost 22% since their June 2016 highs. Read Part 6 through Part 9 in this series to learn about bearish crude oil drivers.

In the next part, we’ll discuss US crude oil prices in early morning trade on August 3.

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