US non-farm payrolls
However, wages grew 2.9% compared to December 2015. It could mean more demand for crude oil–derived fuels like gasoline and diesel as more money comes into consumers’ hands. It’s bullish for crude oil.
US Dollar Index and crude oil
The dollar usually has an inverse impact on crude oil prices. A stronger dollar makes crude oil more expensive for oil-importing countries and pressures prices. The opposite is also true. In the past four trading sessions, the correlation between crude oil prices and the US dollar was -73.6%. It should help explain crude oil’s muted gain despite bullish wages.
So, employment data are an important factor for crude oil prices. The data can have a direct and indirect impact crude oil prices in more than one way.
Impact on energy ETFs
Energy ETFs are also impacted by economic data and the relationship between crude oil prices (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI) (UCO) and the US Dollar Index (UUP). 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, we’ll discuss the relationship between crude oil prices and the S&P 500 Index.