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Fed’s Meeting: Will Crude Oil Prices Collapse?

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Nov. 20 2020, Updated 3:49 p.m. ET

Crude oil prices  

US crude oil (XOP) (UCO) (XLE) futures contracts for July delivery rose 0.6% and closed at $46.08 per barrel on June 12, 2017. Brent crude oil futures rose 0.3% and closed at $48.29 per barrel on June 12, 2017.

Prices rose for the second consecutive day due to the following:

  • expectation of a fall in US crude oil inventories on June 2–19, 2017
  • expectation of a fall in Cushing crude oil inventories on June 2–19, 2017
  • expectation of a fall in Saudi Arabia’s crude oil exports to the US in the coming months
  • supply outage in Nigeria
  • optimism due to positive comments from Saudi Arabia and Russia—they expect the crude oil market to rebalance in 2017
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Fed’s meeting 

The US Dollar Index fell 0.1% to 97.1 on June 12, 2017. The US dollar (UUP) fell ahead of the Fed’s meeting, which will be held on June 13–14, 2017. Market surveys expect that the Fed will increase the interest rate by 25 basis points. To learn more, read Fed’s Meeting Could Drive Crude Oil Prices This Week.

The depreciating US dollar supported oil prices on June 12, 2017. If the US dollar rises after the Fed’s meeting, it could pressure oil (VDE) (BNO) prices. Bearish drivers and the expectation of a strong dollar could cause oil prices to fall. Lower crude prices have a negative impact on companies like Chesapeake Energy (CHK), Continental Resources (CLR), and Denbury Resources (DNR).

S&P 500 is near a record 

The S&P 500 (SPY) (SPX-INDEX) fell 0.1% to 2,429.4 on June 12, 2017. SPY hit an intraday high of 2,445.7 on June 9, 2017—the highest level everenergy sector. The highest level everenergy sector has been limiting the upside for the S&P 500 in 2017.

In the next part of the series, we’ll look at events that could drive oil prices.

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