Impact of U.S. Crude Oil Stocks on Commodities and Currencies
The amount of commercial crude oil that US businesses are holding is tracked weekly by the Energy Information Administration's (EIA) Crude Oil Inventories. The quantity of barrels serves as a basic barometer of oil demand and has an impact on pricing. Inflation has also been linked to changes in the price of oil.
If the crude oil stockpiles are more than anticipated, it indicates that US industries are not utilising as much oil, which will result in a weaker demand and lower crude prices. Because the US is utilising more oil, if crude oil stockpiles are lower than predicted. When studying oil inventories, you take a different strategy than you would with other data releases.
The US will require more oil from its international trading partners if it is using more of its oil. It also implies that US businesses are making more money because they consume more oil for manufacturing, transportation, and gas.
What does this mean for Forex traders?
Forex traders should keep an eye out on major oil exporting countries, this includes:
- Canada (CAD)
- Norway (NOK)
- Russia (RUB)
- Mexico (MXN)
Because the US and US corporations must purchase oil from these nations, you should anticipate an increase in the major exporters' currencies as US oil inventories decline.
CAD/JPY and USD/JPY are noteworthy currency pairs to monitor when oil inventories change. This is so because Japan is one of the biggest oil importers in the world, whereas Canada and the US are major oil exporters.
To gain a clear picture of where the economy is going, remember that what Forex traders should do is compile the appropriate economic data. Are the news stories indicating an improvement in the economy or a weakness?