Crude oil closes lower as the dollar strengthens and fears that the Fed rate hike will affect demand

Crude oil futures closed lower on Tuesday (Sept. 20) as markets were pressured by the appreciation of the dollar and fears that the Federal Reserve’s (Fed) interest rate hike will impact the economy and oil demand.

  • WTI crude futures were down $1.28, or 1.5%, at $84.45 a barrel.
  • BRENT crude futures fell $1.38, or 1.5%, to close at $90.62 a barrel.

A UBS analyst said oil markets have been pressured by concerns that the implementation of tighter monetary policy by the U.S. Federal Reserve (Fed) could hurt oil demand.

CME Group’s FedWatch tool indicates that 82% of investors believe the Fed will raise rates by 0.75% to 3.00-3.25%, and 18% believe the Fed will raise rates by 1.00% today

At the same time, the strength of the dollar has made dollar-settled crude oil contracts more expensive for investors holding other currencies.

The dollar index against the six major currencies of a basket of currencies rose 0.44% to 110.2150.

The market was also negatively impacted by a report from the U.S. Department of Transportation that passenger vehicle traffic in the U.S. fell 3.3% in July to 286.6 billion miles, down for the second consecutive month, as fuel prices soared.

Investors are awaiting the release of EIA crude oil inventories today, while analysts expect U.S. crude oil inventories to have increased by 2 million barrels last week.

The Spot Market is Open

Wednesday, September 21, 2022

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.30

84.08

+0.14%

+0.17%

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