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Is US Crude Oil Losing Momentum?

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US crude oil

Between April 20 and April 27, US crude oil June futures fell 0.4%. On April 27, US crude oil June futures settled at $68.1 per barrel—0.8% below the highest closing level for US crude oil active futures in more than three years.

Last week, the US dollar rose 1.4%. The PowerShares DB US Dollar Bullish ETF (UUP), which tracks the US dollar, rose 1.3%.

A stronger US dollar could be behind the small decline in US crude oil prices. Moreover, the rise in the US dollar could also be behind a fall of 0.1% in the iShares S&P GSCI Commodity-Indexed Trust (GSG) last week. The US dollar often has an inverse relationship with commodity prices.

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Is US crude oil losing momentum?

Last week, Brent crude oil July futures rose 0.6%. The United States Brent Oil Fund, LP (BNO), which tracks Brent crude oil futures, rose 0.7%.

On April 27, Brent crude oil July futures settled at $5.69, higher than WTI crude oil June futures. On April 20, the Brent-WTI spread was at $4.95 per barrel.

Rising US crude oil production could have widened this gap. Plus, concerns surrounding a possible reimposition of US sanctions against Iran could have helped Brent crude oil close in the green last week. On April 29, France, the United Kingdom, and Germany agreed to support the original nuclear deal.

Last week, oil-derived gasoline and heating oil rose 1.5% and 1.3% and outperformed US crude oil as well as Brent crude oil futures. The Direxion Daily Natural Gas Related Bull 3X Shares (GASL) rose 1.8%.

Natural gas

Between April 20 and April 27, natural gas June futures rose just 0.1% and settled at $2.77 per million British thermal units. In the week ending April 27, the United States Natural Gas (UNG) rose 0.2%. The EIA’s inventory data helped natural gas prices increase. However, later in the last week, oversupply concerns could have dragged natural gas prices.

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