Oil gets cheaper on hawkish comments from Fed officials

WTI crude oil rose by 1.2% on Monday, but fell to $74 per barrel on Tuesday, January 10. This decline might be caused by the U.S. dollar’s strengthening, which affects commodities priced in the American currency. Two officials of the Federal Reserve (Fed) have recently announced that interest rates might rise above 5% and then remain at this high level. Rate hikes are still the central bank’s needed measure to fight inflation.

With thin liquidity amplifying price fluctuations and forward curves signaling ample supply, oil has had a rather sluggish start to the year. However, interest for WTI contracts is gradually recovering, even though it stays not so far from its multi-year lows. Currently, it has reached the highest level since September 2022.

China’s economy continues to prepare for growth after the inactivation of its highly-restrictive Covid Zero policy. Regarding this, Beijing provided a generous import quota to companies involved in oil refining and trading.