Crude oil prices
Crude oil prices are near a one-month low. Broader markets such as the S&P 500 (SPY) (SPX-INDEX) and Dow Jones are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. For more on crude oil prices, read Part 1 and Part 4 of this series.
US Dollar Index, the Fed, and President Trump
The US Dollar Index rose 0.2% to 99.88 on April 21, 2017. The dollar hit a high of 103.8 on January 3, 2017—the highest level in 14 years. The dollar (UUP) rose due to the following factors:
US dollar and crude oil
The US dollar fell ~3.7% from its high on January 2017. It’s also down ~0.30% in the last week. It fell due to weak retail sales and inflation data. The US dollar and crude oil (IEZ) (ERY) (ERX) are usually inversely related. A fall in the US dollar makes crude oil more economical for oil importers. When the dollar falls, crude oil prices rise.
A market survey predicts an interest rate hike in June 2017 and September 2017. The expectation of multiple interest rate hikes in 2017 could push the dollar higher. The strong US dollar is expected to be one of the key downside catalysts for crude oil prices in 2017.
In the next part, we’ll discuss the energy calendar for this week.