Crude dips below $58 ahead of Thursday’s EIA Inventory data. Mike McPartland of McNamara Securities tells TheStreet’s Jill Malandrino crude has mostly been more of a technical trade around the U.S. dollar rather than underlying fundamentals. 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. The U.S. dollar moved higher on the durable goods report released Tuesday morning suggesting business investment is slowly starting to pick up following stronger-than-expected consumer prices last week. Commodities move on other fundamentals such as supply and demand in addition to the U.S. dollar and in the case of oil, the supply side far outweighs demand and consumption. McPartland explains that the crack spread, weakened significantly. The crack spread is the difference between crude and the refined products of gasoline and heating oil. The more narrow the crack spread is, the more bearish it is for crude because it signals poor demand and bearish for refiners as it impacts margins.
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet visit:
Check out all our videos:
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+:
source
