Crude oil closes lower as interest rates rise and strong dollar weighs on market

Crude oil futures closed lower on Thursday (Dec. 15) as the market was pressured by the strong dollar and concerns about the impact of interest rate hikes by central banks around the world.

  • WTI crude futures were down $1.17, or 1.5%, at $76.11 a barrel.
  • BRENT crude futures were down $1.49, or 1.8%, at $81.21 a barrel.

The dollar index rose 0.76% overnight against a basket of six major currencies to 104.5570, with the dollar’s strength making dollar-denominated crude oil contracts more expensive for traders holding other currencies.

In addition, investors are concerned that interest rate hikes by global central banks will plunge the economy into recession and slow oil demand. The U.S. Federal Reserve (Fed) raised interest rates by 0.50% at its meeting on Wednesday. And it is signaling that it will continue to raise rates even though the U.S. economy is in danger of sliding into recession.

The European Central Bank (ECB) and the Bank of England (BoE) announced a 0.50% increase in interest rates at their meeting yesterday. They also signaled that they would raise interest rates again in the future to curb inflation.

Another factor that put pressure on the market was the release of poor economic data in China, the world’s largest oil importer. The National Bureau of Statistics of China (NBS) reported that retail sales fell by 5.9% year-on-year in November and Chinese industrial production rose by only 2.2% year-on-year.

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Friday, December 16, 2022

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