Commodity Daily News

Dollar Strength may be putting a Dent in Crude Prices

Crude oil prices were seen falling yesterday but were able to regroup and finish the day even as the dollar rose against the EUR. Prices fell to a low of $72.87 from $74.79 yesterday as the dollar rose against the EUR 0.9%. Crude prices have typically moved in the opposite direction of the dollar's movement. While this proved to be a positive for crude oil prices during times of dollar weakening, the dollar's recent bullish run could put a dent in crude oil's price appreciation.

As economic sentiment improves in the U.S., crude traders may feel the pinch of a stronger dollar. This is natural as the price of crude oil is denominated in U.S. dollars. A rising dollar makes crude prices more expensive and less attractive. A rise in U.S. interest rates would also be a negative for crude oil. With these factors, we could see crude oil drop back down to a fair value of $70.