Crude oil slips on US interest rate hike concerns

Highlights

  • Crude oil prices slipped on Thursday.
  • Expectations of strong economic recovery counterbalance the losses in oil prices.
  • Oil has gained more than 50% in the last year.

Crude oil prices inched lower on Thursday on a strong sell-off as investors booked profit following a two-day gain amid ongoing fear of US interest rate hikes. However, the losses in oil prices are counterbalanced by expectations of strong economic recovery that will enhance demand in a tightly supplied market.

March delivery Brent Crude oil futures last traded at US$84.28 per barrel up 0.14%, whereas February delivery WTI crude oil futures traded 0.35% down at US$81.83 per barrel as of 14 January 2022 at 12:32 PM AEDT.

Crude oil journey

The US Federal Reserve is anticipated to raise the rates four times in 2022 if inflation doesn’t improve quickly, Charles Evans, the president of Chicago Federal Reserve, said on Thursday.

On Wednesday, a falling US dollar helped boost crude oil prices as the weaker greenback makes oil cheaper for other currency holders. Oil prices are inversely proportional to the US dollar.

oil rigSource: © Tebnad | Megapixl.com

The US crude inventories have tumbled for the seventh consecutive week. The significant drop in inventories has also been related to end-of-year tax issues on offshore oil stocks in Louisiana and Texas.

Oil has gained more than 50% in the last year, and various analysts believe that the prices could hit the mark of US$100 per barrel by the end of this year.

Bottom Line

Crude oil prices inched lower on Thursday after reaching two-month highs on Wednesday due to a strong sell-off as investors booked profit following a two-day gain.

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