US retail sales
US (SPY) (IVV) (VFINX) retail sales were flat on a month-over-month basis in July, according to the U.S. Census Bureau. Analysts expected a rise of 0.4%. US retail sales numbers indicate consumer sentiment in the US—the world’s largest crude oil consumer. Better numbers are a good indication of rising consumer spending—including on crude oil derived products like gasoline.
Impact on oil prices
The US retail sales number is also one of the most important economic data points. It impacts interest rate decisions. The Market’s expectation of a rate hike could boost the US Dollar Index (UUP)—this could have a negative impact on crude oil prices (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI). However, a strong economy could mean strong crude oil demand. This would support crude oil prices. Read What’s the Correlation between Crude Oil and the Dollar Index? to learn more.
Impact on energy ETFs
Energy ETFs are also impacted by economic data and the correlation between crude oil prices and the US Dollar Index. These ETFs include the Direxion Daily Energy Bear 3X ETF (ERY), the First Trust Energy AlphaDEX ETF (FXN), the United States Brent Oil ETF (BNO), the Energy Select Sector SPDR ETF (XLE), and the United States Oil ETF (USO).
In the next part of this series, we’ll look at the weather forecast and see how it could impact natural gas prices.