Oil prices kept close link to EUR

Global crude oil prices and the DXY have tracked each other during the last 12 months, as the strong dollar exacerbated the downward move in oil prices. Brent oil prices measured in a DXY basket have only declined 30% since last July, compared to a 40% dollar drop. 

"If we further adjust for strong petroleum product margins, the average drop in fuel prices is just 25%", states Bank of America. 

So wholesale fuel prices in different large oil-consuming regions like the Eurozone sit near the 5-year average, while prices in BRL or TRY are now well above that level! But not in America and dollar semi-pegged China, which is why this pair has recently led oildemand growth globally.

Bank of America estimates, a 1% move in the DXY is linked to a -0.9% move in oil, while a 1% move in the USDEUR is associated with a -0.5% oil price move. These sensitivities matter, because their oil projections are built on the house forecast that the euro and the dollar will trade at parity by year-end.