China gave us a Christmas surprise by hiking its 1-year lending and deposit rates, each by +25 bps, to 5.81% and 2.5% respectively on December 25. This was the second interest-rate increase since October and indicated the Chinese government’s commitment to fight against inflation. Oil prices fell yesterday as China’s tightening may curb demand from the world’s biggest consumer. WTI crude oil for February delivery slipped -0.56% to settle at 91 yesterday. The contract initially soared to a new 26-month high of 91.88 earlier in the day. Benchmark contracts for heating oil and gasoline fell -0.89 and -0.95% respectively. Gold dropped to1372.7 earlier in the day but price was then supported by weakness in the US dollar. The benchmark Comex contract finished the day at 1382.9, up +0.17%. Price moved above 1390 in Asian session today.
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Christmas Surprise from China Weighs on Oil
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