By Russell Glaser – Spot crude oil prices were trending higher during the morning hours of the European trading session today. That was despite poor data from the Department of Energy. Driving the prices higher today so far was a weaker dollar.
Spot crude oil is up $0.30, trading near the $76.12 price level after opening the day at $75.82, a monthly low for the commodity. The EUR/USD has climbed higher today as well, trading up at 1.4144 from an opening day price of 1.4122. Typically spot crude oil prices rise with a falling dollar
Yesterday’s data release by the U.S. Department of Energy showed refinery output plummeted to a historic low. The reduced crude oil output produced by refineries is a response to low demand on the part of consumers. It is expected that crude oil demand will not recover in the next few weeks, which may lead to further price declines in the price of spot crude oil.
While demand is seen as weakening, an appreciating dollar has also been a drag on spot crude oil prices as well. From January 11th, spot crude oil prices have fallen 8.7% while the EUR/USD is down 2.4%. The trend of falling crude prices with a rising dollar retains a relatively strong negative correlation. Traders should always be following the dollar when trading spot crude oil.
Forex Market Analysis provided by Forex Yard.
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