Two hundred and three years after David Melville patented the gas streetlight, and oil prices are lit up once again today. Prices are rallying for a third consecutive day, and for a fifth consecutive week – the longest streak since last May. WTI has now leapt into forty-dollardom to boot, with an impending prompt month rollover to a higher level on Tuesday (contract expiry on Monday). Henceforth, here are six things to consider today:
1) There has been little in the way of economic data overnight to influence markets, with the Uni of Michigan sentiment data the main release of note in the US today – all measures came in below expectations. We have several Federal Reserve FOMC speakers on deck – Dudley, Rosengren and Bullard – who all could all provide further insights into Fed policy going forward. This could filter through to our dearly beloved commodities via US dollar oscillations.
Read Leading Indicators Show US, Global Economy at a Tipping Point
2) The inverse relationship betwixt the US dollar and crude cannot be understated. As we discussed yesterday, the rebound in risk appetite means crude is charging to multi-month highs as the US dollar charges to multi-month lows. As ongoing loose monetary policy and stimulus measures are undertaken around the world, deterioration in the financial state of the US shale industry is likely being postponed by the respite of an oil price rally:
This post was published at FinancialSense on 03/18/2016.
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