Oil price drops 1% after US Fed raises interest rates

Pumpjacks are seen during sunset at the Daqing oil field in China’s Heilongjiang province, 22 August 2019. REUTERS/Stringer

NEW YORK, Sept. 21 (Reuters) – Oil prices fell about 1% on Wednesday to a nearly two-week low in volatile trading after the US Federal Reserve hiked another steep rate hike to quell inflation that has fueled economic activity and the economy. demand for oil could decrease.

The Fed raised its target rate by 75 basis points for the third time to a range of 3.00-3.25% and signaled further large increases to come. Risk assets such as stocks and oil fell on the news as the dollar rose. read more

Brent crude futures were trading 79 cents, or 0.9%, lower at $89.83 a barrel, the lowest close since Sept. 8, while US West Texas Intermediate (WTI) crude was down $1.00 or 1. 2% fell to $82.94, the lowest close since September. 7.

Earlier in the session, oil gained more than $2 a barrel on concerns over Russian troop mobilization before falling more than $1 on a strong US dollar and lower US demand for gasoline.

US gasoline demand fell to 8.5 million barrels per day (bpd) in the past four weeks, the lowest level since February, according to the US Energy Information Administration (EIA).

“The standout data point is the continued weakness in gasoline demand. It’s really what drives this market,” said John Kilduff, partner at Again Capital LLC in New York.

The US Energy Information Administration reported an increase of 1.1 million barrels of crude oil last week, half what analysts had forecast in a Reuters poll.

Russian President Vladimir Putin called on 300,000 reservists to fight in Ukraine and supported a plan to annex parts of the country, hinting that he was willing to use nuclear weapons. read more

US President Joe Biden accused Russia of “reckless” and “irresponsible” threats to use nuclear weapons. read more

Oil prices rose to a multi-year high in March after the war broke out in Ukraine. European Union sanctions banning Russian crude oil imports by sea will come into effect on December 5.

“Much of today’s downtrend appeared to be related to the strength of the US dollar and we still view the near-term direction of the US dollar as a critical component in assessing the direction of the oil price. in the short term,” said analysts at energy consultancy Ritterbusch and Associates.

the dollar

Signs of a recovery in Chinese demand led to a rise in prices early in the session. read more

In the United States, however, economic news was not so good. Existing home sales fell for the seventh straight month in August as affordability deteriorated further due to rising mortgage rates. read more

In Europe, “government is increasingly intervening in energy markets in an effort to avert the economic crisis,” analysts at energy consultancy EBW Analytics said in a note.

Germany agreed to nationalize natural gas company Uniper SE (UN01.DE), while the British government said it would cut wholesale electricity and gas costs for businesses. read more

Additional coverage by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo, Isabel Kua and Florence Tan in Singapore and Laila Kearney in New York; Editing by David Gregorio, Kirsten Donovan and Marguerita Choy

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