7 Jun

Is Crude Oil Ignoring the Falling Dollar?

WRITTEN BY Rabindra Samanta

Oil and US dollar

Between May 30 and June 6, 2017, the US dollar (UUP) (USDU) (UDN) fell 0.7%, and crude oil (USO) (OIIL) July futures fell 3%. However, US crude oil futures moved independently of the US dollar in the trailing week. The two moved in opposite directions in only two instances. The correlation between the two over this period stood at 48.5%.

Is Crude Oil Ignoring the Falling Dollar?

The US dollar’s movements usually impact commodity prices inversely. A weaker dollar should be a boost for oil prices.

Why interest rates could be critical for crude oil

Between June 13 and June 14, 2017, the FOMC (Federal Open Market Committee) will meet to discuss the benchmark interest rate. The benchmark interest rate is an important driver for the US dollar. The dollar, as we discussed above, can drive commodity prices.

So, US dollar movements could impact energy ETFs such the Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X ETF (DRIP) and the Direxion Daily Energy Bear 3X ETF (ERY). Changes in the US dollar are also crucial for oil-related ETFs such as the United States Brent Oil ETF (BNO).

From September 2007 to June 2013, the one-month lagging correlation between US crude oil active futures and the US dollar was mostly in negative territory. However, since June 2013 to date, the correlation moved between -64% and 43%, remaining positive most of the time. This correlation could be because various other fundamental factors like OPEC production cuts, US shale-oil producers, and Trump’s energy policies are affecting oil’s supply-demand dynamics.

Latest articles

Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

14 Jun

IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

14 Jun

Why Kimberly-Clark Stock May Stop Rising


Kimberly-Clark (KMB) stock has risen 20.5% this year, boosted by the company’s better-than-expected sales and earnings during its last reported quarter. However, its stock could stop climbing. Here's why.