Oil prices slide 1% after the Fed raises interest rates According to Reuters

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

By Scott DiSavino and Laila Kearney

NEW YORK (Reuters) – Oil prices fell about 1% to a near two-week low in volatile trade on Wednesday after the U.S. Federal Reserve made another huge interest rate hike to quell inflation. development can reduce economic activity and demand for oil.

The Fed raised its target interest rate by 75 basis points for the third time to a range of 3.00-3.25% and signaled more big hikes to come. Risk assets like stocks and oil fell on the news, while the dollar appreciated.

Oil futures fell 79 cents, or 0.9%, at $89.83 a barrel, their lowest close since September 8, while U.S. West Texas Intermediate (WTI) crude fell. $1.00, or 1.2%, to $82.94, its lowest close since September 7.

Early in the session, oil rose more than $2 a barrel on concerns about Russia’s troop mobilization before falling more than $1 on a strong dollar and falling US demand for gasoline.

U.S. gasoline demand over the past four weeks fell to 8.5 million barrels per day (bpd), the lowest level since February, according to the U.S. Energy Information Administration (EIA). [EIA/S]

“The big data point is that gasoline demand continues to be weak. That’s really what’s haunting this market,” said John Kilduff, partner at Again Capital LLC in New York.

The US Energy Information Administration reported crude inventories rose by 1.1 million barrels last week, half of what construction analysts had forecast in a Reuters poll. [API/S]

Russian President Vladimir Putin has called up 300,000 reservists to fight in Ukraine and backed a plan to annex parts of the country, hinting that he is prepared to use nuclear weapons.

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

Oil prices rose to multi-year highs in March following the outbreak of the Ukraine war. European Union sanctions banning the import of Russian crude oil by sea will take effect on December 5.

“Much of today’s decline appears to be related to the strength of the US dollar and we still view the US dollar trend in the short term,” said analysts at energy consulting firm Ritterbusch and Associates. is an important component in assessing short-term oil price trends.”

The dollar is on track to close its highest in more than 20 years against a basket of other currencies, making oil more expensive for buyers using other currencies.

Signs of a recovery in demand in China sent prices up early in the session.

However, in the United States, the economic news is not so good. Existing home sales fell for a seventh straight month in August as affordability worsened amid a sharp rise in mortgage rates.

In Europe, “governments are increasingly intervening in energy markets in an effort to avert an economic crisis,” analysts at energy consulting firm EBW Analytics said in a note.

Germany has agreed to nationalize Uniper SE (OTC:), while the UK government has said it will limit the wholesale cost of electricity and gas to businesses.

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