The stock market is a dangerous place to be. Watching VIX spiked from 17 to 50+ then crashing back to 30 within two days can certainly cause a cardiac arrest or two. What’s even worse is that investors took this little dip as a buying opportunity throwing more good money at this deformed market. On Tuesday U.S. stocks rebounded to post the biggest rally in 15 months. We have discussed many times that stocks have a long way to go before any normalcy may be restored. On that note, let’s move to the oil/gasoline market instead. 

Crude’s Recent Rally

Crude oil is not immune to this global equity selloff. U.S. West Texas Intermediate (WTI) crude ended Tuesday’s session at $63.39, which is the lowest in two weeks. Crude oil has actually been on a rally with WTI topping $65/b for the first time in more than three years on Jan. 24 after data showed continuing drawdown of crude storage, while Brent also climbed to around $70, the highest point since Dec. 5, 2014. 

Another contributing factor to stronger oil prices is a weaker U.S. dollar. The dollar index hit a three-year-low two weeks ago after US Treasury Secretary Mnuchin said a weaker greenback is “good” for the country. Global commodities such as crude oil are priced in dollar, so a lower dollar usually pushes up the commodity price.

$100 Oil in 2019?