WTI vs USD
The two charts included here show the US Dollar and the DEC 14 WTI
Crude price for the last twelve months.
Do you see anything interesting when you compare these two charts?
Pretty much mirror images of each other, right?
In July of 2014, the US imposed the third and final round of sanctions on
Russia. These biting sanctions were heavily imposed on the Russian
money making machine – its oil and gas sector.
Without lower energy prices, these sanctions could not have an impact.
How can the US reduce oil prices without directly intervening in the market?
The answer is by strengthening the US currency. A stronger dollar results
in lower oil prices.
So, the question on everyone’s mind is this - how low can oil go?
The real question should be this - how high can the dollar go?
Stay tuned for an attempt to answer the second question.
(charts from marketwatcy.com)