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Oil Prices Slide 1% Following Interest Rate Hikes

Oil prices dropped around 1% to a near two-week low in volatile trade on Wednesday after the U.S. Federal Reserve delivered another significant rate hike to curb inflation that could reduce economic activity and demand for oil.

According to a report, the Fed increased its interest rate by 75 basis points for the third time, bringing it to a 3.00-3.25% range, and indicated that more increase rates are coming. Risky assets such as oil and stocks declined due to the news while the dollar appreciated.

Brent crude futures settled 79 cents, or 0.9%, lower at $89.83 a barrel, its lowest close since September 8, while U.S. West Texas Intermediate (WTI) crude fell $1.00, or 1.2%, to $82.94, its lowest close since September 7.

Earlier in the session, oil gained over $2 a barrel on worries about a Russian troop mobilization before dropping over $1 on a strong U.S. dollar and lower U.S. gasoline demand.

U.S. gasoline demand over the past four fell to 8.5 million barrels per day (bpd), its lowest since February, according to the U.S. Energy Information Administration (EIA).

“The stand-out data point is the continuing weakness in gasoline demand. It’s really what’s been haunting this market,” said John Kilduff, partner at Again Capital LLC in New York.

Oil prices jumped to a multi-year high in March after the Ukraine war broke out. European Union sanctions banning seaborne imports of Russian crude will come into force on December 5.

“Much of today’s downside appeared related to strength in the U.S. dollar, and we still view near-term U.S. dollar direction as a critical component in assessing near-term oil price direction,” analysts at energy consulting firm Ritterbusch and Associates said.

This story originally appeared on Yahoo.

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Jason Murphy
Jason Murphy
March 20, 2024 11:15 am

Looks like oil prices are taking a hit due to those interest rate hikes by the Fed. If you’re into energy market investments, it’s a good time to keep an eye on how these rate changes are shaking up the oil prices and market scene. Stay tuned for what unfolds next!


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