Oil prices slide after Fed hikes interest rates for the ninth time in a row
Oil prices are dipping again this morning, after the Federal Reserve hiked interest rates a further 25 basis points today.
This follows three sessions of gains – with investors fears of contagion across the banking sector easing, after the collapse of Silicon Valley Bank and the merger of UBS and Credit Suisse.
Interest rates are now at 4.75-5.00 per cent, the highest level since 2007 – following a ninth rise in interest rates in a row.
Fed Chair Jerome Powell has also warned that banking industry stress could trigger a credit crunch with “significant” implications for the world’s largest economy – which US central bank officials expect will slow even more this year than previously thought.
This has seen oil prices – which settled at their highest levels since last week yesterday night – begin to tumble again.
Brent Crude is down 0.42 per cent, trading ay $76.37 per barrel while WTI Crude is down 0.56 per cent at $70.50 per barrel
Oil has benefitted from the US dollar dropping to a six-week low, alongside bullish expectations of demand recovery in China – the world’s top oil importer.
This could support prices even through economic turbulence across the banking sector – with Goldman Sachs forecasting that oil demand topping 16m barrels per day.
OPEC and IEA both expect demand to outstrip supply in the second half of 2023, with China driving a surge in oil consumption.
Meanwhile, US crude oil stockpiles rose unexpectedly last week to their highest level in nearly two years – the latest data from the Energy Information Administration showed.
Crude inventories rose in the week to March 17 by 1.1m barrels to 481.2m barrels, the highest since May 2021.
Analysts in a poll from news agency Reuters expected a 1.6m barrel drop.