How Will the US Job Report Affect Oil Prices?



US payrolls

US (VFINX) (VOO) non-farm payrolls rose 151,000 in August 2016, according to the U.S. Bureau of Labor Statistics report released on September 2, 2016. The expectation was for an increase of 180,000. The smaller-than-expected payroll number could impact the timing of the next rate hike, since it suggests that US economic (VFINX) (VOO) recovery is moving at a slower-than-expected pace.

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The impact of US job data on crude oil

The US payroll number is one of the most important economic data points that impacts interest rate decisions. The market’s expectation of a rate hike following the news could boost the US Dollar Index (UUP), which could negatively affect crude oil prices. However, a strong labor market and a strong economy could mean strong crude oil demand, which would support crude oil prices. To find out more, read What’s the Correlation between Crude Oil and the Dollar Index?

Impact on energy ETFs

Energy ETFs are also impacted by economic data and the correlation between crude oil prices (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI) 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.


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