• 5 minutes Covid-19 logarithmic growth
  • 8 minutes Why Trump Is Right to Re-Open the Economy
  • 12 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 14 minutes China Takes Axe To Alternative Energy Funding, Slashing Subsidies For Solar And Wind
  • 31 mins Which producers will shut in first?
  • 2 hours The Most Annoying Person You Have Encountered During Lockdown
  • 5 hours Its going to be an oil bloodbath
  • 18 hours We are witnesses to the end of the petroleum age
  • 58 mins Saudi Aramco struggling to raise money for this year's dividend of $75 billion. Now trying to sell their pipelines for $10 billion.
  • 20 mins Russia's Rosneft Oil Company announces termination of its activity in Venezuela
  • 23 hours Breaking News - Strategic Strikes on Chinese Troll Farms
  • 28 mins Saudi Arabia Can't Endure $30 Oil For Long
  • 1 hour How to Create a Pandemic
  • 8 hours Wastewater Infrastructure Needs
  • 21 hours A New Solar-Panel Plant Could Have Capacity to Meet Half of Global Demand
  • 22 hours >>The falling of the Persian Gulf oil empires is near <<

Dollar Strength Is Likely To Cap Oil Price Gains

Tanker

This morning, my old stomping ground of forex is making a rare appearance in the news. The problems in Turkey and the actions of the Erdogan regime caused the dollar index to spike overnight, which in turn drew attention to dollar strength that has been building for some time. Very few have been talking about it to this point, but the fact that the U.S. currency is at levels not seen for over a year is now becoming a subject of interest. That is probably overdue, but does it really mean anything for energy investors, or more specifically for the price of oil?

“The strength of the dollar influences the price of oil” is a sentence that to my mind should be an obvious statement of fact, yet a lot of people doubt it these days. The doubters, however get it wrong on two fronts.

First, they tend to misinterpret the statement above. I do not maintain that dollar strength is the only influence on the price of oil, nor even that it is the biggest, simply that it is one. Pointing to the lack of inverse correlation between the charts below, as those doubters often do, is therefore irrelevant. At different times, different things become the major influence on oil. It could be growth projections and their potential effect on demand, or OPEC squabbles and their potential effect on supply, for example. In reality of course, all those factors, and a whole host of others, are always simultaneously affecting price. When I say that “The strength of the dollar influences…




Oilprice - The No. 1 Source for Oil & Energy News