• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Russia Says Europe Will Struggle To Replace Its Oil Products
  • 3 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 12 hours Reality catching up with EV forecasts
  • 18 hours A Somewhat Realistic View of the Near Future for Electric Vehicles Worldwide
  • 1 day "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 11 days US Oil Independence is a myth and will always be a myth
  • 7 days The Federal Reserve and Money...Aspects which are not widely known
  • 11 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 15 days Natural gas price to spike when USA is out of the market
  • 14 days "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 15 days *****5 STARS - "The Markets are Rigged" by The Corbett Report
Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

More Info

Premium Content

Oil Prices Fall After Fed Raises Rates

  • The U.S. Federal Reserve hiked interest rates by 75 basis points on Wednesday.
  • The rate hike is the third straight hike for the Fed, and rates are now the highest they’ve been since 2008.
  • Crude prices reacted negatively to the news with Brent crude falling back toward $90 per barrel.

Oil prices continued to slide on Wednesday afternoon after the Federal Reserve announced it would hike rates by 75 basis points.

Fed Chair Jerome Powell acknowledged last month that rate hikes would cause pain—pain intended to  bring about demand destruction necessary for bringing down inflation.

The rate hike was expected heading into the meeting, with most analysts foreseeing a rate hike of 75 basis points, while a few analysts were anticipating a 100 basis point hike. Oil prices were already trending down prior to the meeting. The rate hike sank them further.

An hour before the Fed announcement, WTI crude was trading at $83.31 per barrel—down $0.63 (-0.75%) on the day. Brent was trading at $90.03 per barrel, or a loss of $0.59 on the day.

ADVERTISEMENT

The rate hike is the third straight hike for the Fed, and rates are now the highest they’ve been since 2008.

While gasoline prices have come down 22 cents per gallon over the last month—a relief to drivers--core consumer prices rose by more than anticipated in August. The Core Consumer Price Index tracks the changes in prices for goods and services, excluding energy and food.

While gasoline prices have cooled over the last couple of months, it is still nearly $0.50 per gallon more expensive for American drivers than it was this time last year. 

ADVERTISEMENT

Powel is expected to hold a press conference at 2:30 p.m. ET, which will include its forecast.

Higher rates typically translate into a stronger dollar, which in turn tamps down the price of crude oil, with oil more expensive for buyers holding foreign currencies. The dollar reached a 20 year high earlier on Wednesday.

The possibility of a recession—which could trigger demand destructure--caused by higher rates has also weighed on crude prices.

Crude oil was trading down on the news.

By Julianne Geiger for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage


ADVERTISEMENT


ADVERTISEMENT



Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News