• 4 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 7 minutes Countries with the most oil and where they're selling it
  • 10 minutes Stack gas analyzers
  • 13 minutes What Would Happen If the World Ran Out of Crude Oil?
  • 8 hours How many drilling sites are left in the Permian?
  • 4 hours Mueller Report Brings Into Focus Trump's Attempts to Interfere in the Special Counsel Investigation
  • 49 mins "Undeniable" Shale Slowdown?
  • 3 hours US Military Spends at least $81 Billion Protecting OPEC Persian Gulf Oil Shipping Lanes (16% DoD Budget)
  • 36 mins End of Sanction Waivers
  • 5 hours Case against Trans Mountain Begins
  • 4 hours Trudeau Faces a New Foe as Conservatives Retake Power in Alberta
  • 1 hour Climate Change Protests
  • 3 hours Gas Flaring
  • 1 day Overheating the Earth: High Temperatures Shortened Alaska’s Winter Weather
  • 5 hours U.S. Refiners Planning Major Plant Overhauls In Second Quarter
  • 6 hours Oil at $40
  • 4 hours China To Promote Using Wind Energy To Power Heating
  • 1 day Everything Is Possible: Germany’s Coal Plants May Be Converted to Giant Batteries

Breaking News:

Guaido Takes Strides To Topple Maduro

The Dollar Will Decide Oil’s Next Move

Regular readers will know that I believe that one of the most important fundamental influences on the price of oil is the relative strength or weakness of the U.S. Dollar. Obviously according to economics 101 supply and demand ultimately set the price of any commodity, but when, as is the case with oil, that commodity is priced in dollars in a global market the intrinsic value of the dollar is just as important.

Normally the dollar index, which gives the average value of the dollar against a basket of other currencies, moves fairly slowly so judging the impact on oil prices is about predicting long term trends. Sometimes, though, things change quite fast and even short term predictions for oil are dependent on the fate of the dollar. That seems to be the case right now, so traders should be watching the dollar’s movement closely.

(Click to enlarge)

Figure 1: Dollar Index 1 Year Chart

In case you have not been following it the dollar index has, like most things, been on the move since the U.S. elections. As the so called “Trump Bump” pushed American assets higher, so the dollar also gained ground. That is normal in times of optimism about U.S. growth, but because of the cause, as well as mounting evidence that OPEC’s restrictions on output were actually taking place, oil followed suit, which is not typical. WTI jumped from around $45 at the beginning of November to above $55 at the end of the year.

That is,…




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