Crude oil futures closed down more than 2 percent on Monday (Jan. 24), with markets pressured by the appreciation of the dollar and concerns that the U.S. Federal Reserve (Fed) may raise interest rates sooner than expected.
- WTI crude futures were down $1.83, or 2.15%, at $83.31 a barrel.
- BRENT crude futures were down $1.62, or 1.84%, at $86.27 a barrel.
Trading conditions on the oil market were influenced by the strength of the dollar. The dollar index against the six major currencies in a basket of currencies increased by 0.28% to 95.9100.
The oil market also seems to have been infected by the sell-off on the stock markets. The major U.S. indexes have been experiencing a downturn since the beginning of this year, which has spread to many other markets. On the other hand, oil prices have risen sharply again recently, so the current decline is not unusual. Therefore, the recent movements may also be due to profit-taking. Since the beginning of this year, the price of oil has risen by more than 10%. This was supported by concerns about the tense situation in the oil market after the explosion of a Turkish oil pipeline and the attacks on the UAE.
The Fed will announce its interest rate decision in the night from Wednesday to Thursday (Asia time GMT+7). This is also where the further development of the dollar will be decided.
In addition, the tense situation in Ukraine also depressed oil prices. The United States and Great Britain have ordered the families of diplomats to leave Ukraine. Meanwhile, NATO has announced military reinforcements as the likelihood of an imminent Russian attack on Ukraine grows.
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Tuesday, January 25, 2022