Oil falls as U.S. Fed’s pending interest rate hike spooks investors

Drilling for oil in Weld County on Monday, Aug. 17, 2020. (CPR News photo)

SULAIMANI (ESTA) — Oil prices fell on Thursday as the U.S. dollar strengthened following signs that the U.S. Federal Reserve will tighten monetary policy in the world’s biggest oil user.

Brent crude futures fell 69 cents to $89.27 a barrel at 0610 GMT, after earlier falling by as much as 1.1% to $89. It climbed 2% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were down 71 cents at $86.64 per barrel, after falling as much as 1.2% 5o $86.34. It gained 2% in the previous session.

Futures pulled back amid a broader decline in financial markets triggered by the March interest rate increase telegraphed by the Fed and as the dollar climbed against its major peers.

“It could be a strong U.S. dollar at play after the Federal Open Markets Committee signaled rates will rise,” Reuters quoted Commonwealth Bank analyst Vivek Dhar as saying.

The dollar rose on higher U.S. Treasury yields, lifting the U.S. dollar index, which measures the greenback against major peers, to 96.604, near five-week highs, according to Reuters.

Crude prices surged on Wednesday, with Brent climbing to $90 a barrel for the first time in seven years, amid the tensions between Ukraine and Russia, the world’s second-largest oil producer, that has fanned fears of energy supply disruptions to Europe.

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