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Source: U.S. Energy Information Administration based on Bloomberg data.

Over the past few weeks (July 1 through August 19), the movement of oil prices has closely mirrored that of the Standard and Poors (S&P) 500 Index. Crude oil settlement futures prices for West Texas Intermediate (WTI) crude fell just over 13% while the S&P 500 stock index fell 16% during this period.

The recent strong relationship between oil and equity prices resembles that seen during the economic downturn and recovery in 2008-2010. This contrasts with a weaker correlation between oil and equity prices in the years before 2008 and also with price movements earlier this year, when oil and stock markets decoupled. One notable exception to this recent price correlation came on August 9. (EIA, 8/22/2011)