Can the US Dollar Index Help WTI Crude Oil Prices?

The US Dollar Index fell ~0.13% to 93.89, and July WTI oil futures rose ~1.2% on June 5.

Gordon Kristopher - Author

Nov. 20 2020, Updated 3:32 p.m. ET


US Dollar Index 

The US Dollar Index fell ~0.13% to 93.89, and July WTI oil futures rose ~1.2% on June 5. The weak US Dollar Index supported oil prices on the day.

However, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell ~0.27% on June 5. XOP seeks to follow the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. US natural gas futures fell 1.4% on June 5, which could have pressured stocks in XOP. CVR Energy (CVI), SRC Energy (SRCI), and Halcón Resources (HK) account for a combined ~3.1% of XOP’s holdings. These stocks fell ~4.3%, ~4%, and ~3.6%, respectively, on June 5. They were among the stocks in XOP’s portfolio that fell the most on June 5.

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US dollar’s highs and lows

The US Dollar Index fell to 88.59, its lowest level since December 2014, on February 15. WTI crude oil futures reached $61.34 per barrel on February 15.

The US Dollar Index rose to 103.2, its highest level in the last 14 years, on January 3, 2017. WTI oil futures hit $52.33 per barrel on the same day.

The Power Shares DB US Dollar Bullish ETF (UUP) seeks to track the performance of the US Dollar Index. UUP fell 0.12% to $24.75 on June 5, while the US Dollar Index fell ~0.13% on the same day.


The US Dollar Index fell ~9.8% in 2017, while US crude oil prices rose ~12.4% during the same period. The weak US Dollar Index partly supported oil prices in 2017.

The US dollar has risen 2.2% year-to-date. US crude oil prices have risen ~8.5% during the same period despite the strong US Dollar Index. Oil prices rose due to ongoing supply cuts, expectations of new sanctions on Iran and Venezuela, strong demand, and supply outages.

The Fed is expected to increase the US interest rate four times in 2018, which could be bullish for the US Dollar Index. The US Dollar Index averaged 96.6 last year. Bloomberg surveys estimate that the US Dollar Index could average ~90 this year.

However, the improving economy outside the United States could see the US Dollar Index lag its peers. Major central banks could increase interest rates in 2018. A weak US Dollar Index could have a positive impact on oil prices.

Next, we’ll take a look at Libya’s crude oil production.


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