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Commodities
27 Jan 2022
Oil Tumbles as Imminent Interest Rate Hikes Sparks Fears among Investors
The Index Today
Oil prices took a tumble on Thursday while the dollar firmed following the Federal Reserve’s decision to tighten monetary policy in the U.S.
Brent crude futures were down by 0.6% to $89.44 per barrel at 0720 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped by 0.6% to $86.77.
Vivek Dhar of Commonwealth Bank said, "It could be a strong U.S. dollar at play after the Federal Open Markets Committee signaled rates will rise." The increase in dollar drove the rise in the U.S. dollar index to approach a five-week high, hitting 96.604.
The OPEC+ is attempting to increase production as global demand for oil recovers from its previous pandemic-induced slump. However, its inability to meet its December targets point towards restrictions in capacity.
Howie Lee of OCBC Singapore said, "Continued supply challenges and mounting Russia-Ukraine tensions continue to support crude oil prices. It is down slightly today but I think it is nothing more than a technical move."
