There is a divergence building between the U.S. dollar index and the West Texas Intermediate (WTI) crude oil contracts.
These two markets have been inversely correlated at a very high degree over the past two years. As the price of the U.S. dollar index rises, the price of commodities priced in the dollar particularly the WTI contract tend to fall.
The U.S. dollar has been rising from its May 15th low increasing by 4.7%. During a similar time frame, the price of crude oil has remained steady and is currently trading just .4% below the mid-May high.
The price of crude oil has not been falling as it typically does with strength in the dollar. The increasing U.S. dollar index could be an early sign of an impending sell off in the crude oil market.
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