Weaker Dollar is Only Temporary Relief for Crude
Yesterday, WTI crude closed slightly lower on the heels of a dip in equities. Equities in August had gains for the month unequalled since the 1980’s. While equities influenced crude, crude was for the most part range bound, closing near the top of the range at levels last seen in March. Crude is trending higher in early trading this morning.
Overnight, the dollar reached its lowest level in two years. A weak dollar is lifting crude markets this morning, making dollar denominated commodities such as oil cheaper on the international market. The weaker dollar may only have a fleeting effect on crude as inventories remain high and demand concerns due to the coronavirus persist. “We believe that the impact of a cheaper dollar from current levels will see a minimal impact on crude purchases, irrespective of slightly more favorable crude pricing,” said RBC Capital’s Mike Tran. Oil is already cheap and if demand is not there to soak up the excess crude, then prices will be stagnant.
In early trading today, crude prices are up. Crude is currently trading at $43.21, a gain of 60 cents.
Fuel prices are up this morning. Diesel is trading at $1.2375, a gain of 2.0 cents. Gasoline is trading at $1.2350, a gain of 2.1 cents.
This article is part of Daily Market News & Insights
Tagged: currency, demand, dollar, oronavirus
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