Oil Prices Erase Early Gains as Greenback Rises Following Fed’s Rate Hike

West Texas Intermediate (WTI) crude oil futures for delivery in January were trading 1.0% lower at $50.52 per barrel during Thursday’s pre-market trading session while Brent oil futures for delivery in February were 0.2% lower at $53.77 per barrel.

The pre-bell price declines come as the greenback is advancing the morning after the Federal Reserve’s rate-setting committee, the Federal Open Markets Committee, opted to raise interest rates for the first time in 2016, a decision which had been widely expected.

As a dollar-denominated commodity, a higher greenback tends to make oil less affordable for international buyers. The dollar index, which tracks the value of the US currency against a basket of foreign currencies, was 0.9% higher at the time of writing.

The price declines follow early morning gains for both oil benchmarks and after government data showed a surprise decline in the size of oil inventories held in the US last week. US stockpiles fell by 2.6 million barrels in the week ended December 9, the fourth consecutive week of declines and a departure from the American Petroleum Institute’s projection for an increase in stockpiles.

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