On August 15, 2016, US crude oil (USO) (OIIL) (USL) (SCO) contracts for September delivery closed at $45.74 per barrel—2.8% above its previous closing price.
The Market’s expectation of a rate hike following improved economic data could boost the US Dollar Index (UUP), which could negatively affect crude oil prices.
From July 14 to July 21, the US crude oil futures contract for September delivery fell ~3.4%. The fall in energy ETFs could be due to the fall in oil prices.
The relationship between crude oil inventories and crude oil prices is inverse. Crude oil prices bottomed out in early 2016. Inventories topped out as well.
The US (SPY) (VOO) consumer sentiment index was 93.5 for June’s final reading, according to the University of Michigan survey released on June 24, 2016.
The one-month correlation of crude oil prices with the US Dollar Index was -9.2% on May 27. It shows the US dollar’s inverse impact on crude oil prices.
Crude oil’s (USO) implied volatility was 33.31 on May 27, 2016. The 15-day average is at 39.16. The current implied volatility is 15% below its 15-day average.
Market expectations of a rate hike could strengthen the US Dollar Index if the crude oil rally continues. Rising crude oil can also reflect improving consumer sentiment.
The US (SPY) (VOO) CPI (consumer price index) rose 0.4% on a month-over-month basis in April, according to a US Department of Labor report on May 17, 2016.
Between May 5 and May 12, 2016, the energy sector underperformed other market sectors. The Energy Select Sector SPDR ETF (XLE) rose ~0.63% in the period.
In February 2016, crude oil touched a 12-year low, and the S&P500 hit a one-year low. Crude oil and the S&P 500 index seem to have already discounted the slower growth rate.
Abraxas Petroleum has the highest positive correlation with WTI crude oil among the upstream companies that are part of XOP between February 11 and April 4.
