Publish date:

Crude Could See a Move Lower in the Very Near-Term

EIA (Energy Information Agency) data showed an unexpected drawdown, although crude oil fundamentals remain weak.

EIA (Energy Information Agency) data showed an unexpected drawdown, although crude oil fundamentals remain weak. Just like other asset classes, oil is highly anticipating the Federal Reserve’s decision regarding interest rate hikes and the impact it will have on the U.S. dollar. Commodities are priced in U.S. dollars, so as the greenback moves higher, instruments like oil and gold generally move lower, and the inverse applies due to the strong correlation in the moves. In addition to the Fed, and more importantly, weak Chinese demand for crude and the supply glut will continue to weigh on oil until either production gets cut globally and demand significantly improves so supply can dwindle down. Alan Harry of Harry RE Trust tells TheStreet’s Jill Malandrino that he surprised by the huge move crude got following the drawdown because there is enough supply where the market could see another low in crude.

TheStreet Recommends