Demand worries overshadowed a drop in crude stocks after the Energy Information Administration (EIA) seemed to suggest refiners going into maintenance and a weakening demand for gasoline helped send the market higher.
The day after crude oil prices rose almost 5% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade. As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down.
U.S. crude oil production may be falling faster than many had thought and we are seeing signs of that in Cushing, Okla. Cushing is the Nymex delivery point and a storage facility that if you listened to the Ultra Bears was supposed to be overflowing with oil. Instead the opposite is happening as supply there have fallen five out of the last seven weeks and is slated to fall once again.
WTI crude oil prices fell for a sixth day on Wednesday down to $47.69, marking its longest string of losses in a year, as worsening global oversupply offset the potential lift from a weaker dollar and an expected drop in U.S. crude stocks.
The morning after, crude oil prices got whack and the market is trying to pick up the pieces. The perfect combination of the "no" vote in Greece, the turmoil in the Chinese stock market and hopes about a potential deal with Iran on its nuclear program had traders running for the exit.