What is the impact of the rise in the US dollar on crude oil futures? Will crude oil rise or fall?

Generally speaking, if the value of the yuan appreciates, the price of crude oil will fall, and if the value of the dollar falls, the price of crude oil will rise. The rise in the US dollar can have a certain impact on crude oil, but as I said above, the impact is not the main one. Crude oil and the U.S. dollar have also risen simultaneously. Since crude oil is priced in U.S. dollars, crude oil and the U.S. dollar usually have a negative correlation. A stronger U.S. dollar will put pressure on crude oil prices. However, due to the strong rise in oil prices this time, the negative correlation between the US dollar and crude oil is not obvious. First, the inflation carry trade has led to the current simultaneous rise in crude oil and the US dollar. This arbitrage behavior first pushes up oil prices and increases inflation expectations, and then bets on the Federal Reserve to speed up the pace of interest rate hikes and is bullish on the US dollar. Secondly, frequent geopolitical events in the Middle East and unstable regional situations have continued to push up oil prices, and American political forces are involved behind this. We believe that the situation in the Middle East is highly complex, and conflicts between Saudi Arabia and Iran, as well as conflicts between Israel and Saudi Arabia, may cause geopolitical tensions and push up the risk of oil prices rising. Let’s talk about the eight major factors that affect crude oil:

Oil, also known as black gold, is a non-renewable energy source with a wide range of uses and is closely related to our daily lives. The price of oil is related to the national economy and people’s livelihood. and the world economic and political landscape. The market is also calculated in US dollars.

1. Sudden major political events

In addition to its general commodity attributes, oil also has the attributes of a strategic material, and its price and supply are greatly affected. Affected by political forces and political situations. In recent years, with the development of political multipolarity, economic globalization, and production internationalization, competition for oil resources and control of the oil market have become important causes of oil market turmoil and soaring oil prices.

Examples; presidential election, sudden death or resignation of a senior leader, war. . . .

2. Changes in oil inventories

Inventories are a buffer between supply and demand and have a positive effect on stabilizing oil prices. OECD inventory levels have become an indicator of international oil prices, and commercial inventories have a significantly stronger impact on oil prices than conventional inventories. When futures prices are much higher than spot prices, oil companies tend to increase commercial inventories, stimulating spot price increases, and the futures-spot spread decreases; when futures prices are lower than spot prices, oil companies tend to reduce commercial inventories, and spot prices fall. Form a reasonable price difference with the futures price.

For example; there is inventory change in US dollars every Wednesday.

3. Market intervention by OPEC and the International Energy Agency (IEA)

OPEC controls most of the world’s remaining oil production capacity, and the IEA has large oil reserves. They can Change the market supply and demand pattern in a short period of time, thereby changing people's expectations for oil price trends. OPEC's main policies are to limit production to protect prices and reduce prices to protect production. The 26 member countries of the IEA jointly control large amounts of oil stocks to cope with emergencies.

Examples, speeches and policies of two organizations, increasing or decreasing production.

4. Short-term flow of funds in the international capital market

Since the 1990s, the international oil market has been characterized by a significant increase in the influence of the futures market. At present, a trend has been formed from the futures market to The price formation mechanism of spot market transmission. Although speculation in the international crude oil market is not the inducing factor for the rise in oil prices, due to the lack of investment opportunities in the global financial market, a large amount of funds have entered the international commodity market, especially the crude oil market, which has inevitably pushed up the international oil price and caused it to seriously deviate from the basic level. noodle.

For example; investment trends in regional countries are directly related to politics and interest rates

5. Exchange rate changes

Relevant research shows that changes in oil prices and the relationship between the US dollar and There is a weak correlation between exchange rate changes between major international currencies. As the U.S. dollar continues to depreciate, real revenues from petroleum products priced in U.S. dollars decline, leading OPEC to respond by maintaining high crude oil prices.

For example; most oil transactions are still settled in U.S. dollars, and the exchange rate between the U.S. dollar and non-U.S. currencies will affect oil prices

6. Abnormal weather

Many European and American countries use oil As a heating fuel, when the climate changes abnormally, it will cause short-term changes in the demand for fuel oil, thereby driving the price changes of crude oil and other oil products. In addition, abnormal weather may cause damage to oil production facilities, leading to supply disruptions and thus affecting oil prices.

Example; supply and demand relationship

7. Interest rate changes

In the standard non-renewable resource model, an increase in interest rates will lead to a decrease in future mining value relative to current mining value , thus making the mining path convex toward the present and away from the future. High interest rates will reduce capital investment, resulting in smaller initial mining scale; high interest rates will also increase the capital cost of alternative technologies, resulting in slower mining rates.

For example; changes in interest rates in the world's major economies, the United States, China and the European Central Bank

8. Tax policy

Government intervention will make the market consumption curve convex toward the present or future . The tax effects of intertemporal oil extraction patterns depend on the present value of taxes over time. For example, a decrease in the present value of taxes over time would alter the decision to mine the sequence. Compared with no taxation, taxation will ultimately reduce the net income at any point in time, which will also reduce the enthusiasm for mining in the corresponding period. And taxes can reduce the return on investment in newly discovered reserves.