Oil prices tumble on US Fed rate hike, US dollar gains

Oil prices fell sharply to below $78 in trading today after the US Federal Reserve’s decision to raise its interest rate on emergency loans to banks boosted the US dollar. Light crude oil futures for delivery in March, was down $1.12 to $77.94 a barrel on the NYMEX, while in London, Brent crude oil futures for April delivery eased $1.03 to $76.75 a barrel. Analysts said the Federal Reserve’s move to raise the discount rate, or the primary credit rate, to 0.75% from 0.5% surprised markets in its timing. The Fed said the increase reflected the easing of the financial crisis that resulted from a home mortgage meltdown. The action sent the US dollar sharply higher against all of the major currencies and prompted oil prices to tumble from five week highs of more than $79 a barrel reached yesterday due to rising US energy demand. “The emergency easing cycle began with discount rate cuts, it was all about easing liquidity to banks. So the move to raise the discount rate means the long journey toward policy normalisation has begun,” Robert Rennie, chief currency strategist at Westpac in Sydney, said in a Reuters chat room. The US Dollar Index, a gauge of its performance against six major currencies, rose more than 1 percent to its highest in eight months at 81.30 after the Fed move, which was announced after Wall Street stock markets had closed. UK sterling also fell to a 9 month low against the dollar, dropping 0.9 percent to $1.5380. In all likelihood, the Fed will keep winding down monetary stimulus, while the Bank of England may have to extend its own growth friendly policies to shore up the UK’s patchy recovery. Crude oil prices are expected to trade with a negative bias today. The dollar is expected to strengthen and crude oil prices will take cues from movement in the US dollar. Support for NYMEX March Crude Oil is seen at $77.30 – $76.30 levels & resistance at $79.00$79.90 levels. Brent oil trading around $77 mark, eyes on US dollar Brent oil price hovers under $77 on higher dollar, markets Oil prices trading steady as US dollar makes gains Oil prices trading down two percent on stronger US dollar Oil prices trading steady on higher dollar, awaits EIA data Oil prices trading higher, maybe closing in on $80 mark Light oil prices trading around $74, eyes on US Dollar US Light oil prices trading near $75, investors eye US dollar Oil prices & commodities trading higher, US dollar slides Oil prices trading higher amid stronger US Dollar, Europe Higher US dollar sends oil prices back to $70 range Crude oil prices trading higher, eyes on US Dollar Index Crude oil prices trading higher amid a stronger US dollar Oil prices trading lower on stronger US dollar, demand Oil prices trading down one percent after early gains Oil prices to trade through $80 on US data, US dollar Oil prices trading steady, awaits US crude inventory data Light oil price trading back over $80 on buying activity Brent oil price trading up on latest positive US GDP data Light oil price trading back near $80 on weaker US dollar

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Oil prices tumble on US Fed rate hike, US dollar gains