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Oil Declines After Fed Decision and Weak China Data

Crude prices slipped on concerns about the economic outlook in the U.S. and China.

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Oil prices eased on Thursday after the Federal Reserve indicated that interest rates will probably stay high for longer than previously anticipated.

The message on borrowing costs led to concerns about energy demand in the coming months. It also strengthened the dollar against its peers, which tends to push down on oil prices by making dollar-priced contracts more expensive for foreign buyers.

Brent Crude, the international standard, slipped 0.8% to $82.04 a barrel. West Texas Intermediate, the U.S. benchmark, declined 1% to $76.50 a barrel.

Fed Chairman Jerome Powell on Wednesday said policy makers will continue to raise interest rates into 2023 after a half-point hike at the latest meeting. At the same time, the Fed said the economic outlook has worsened.

Separately, data out of China, the biggest importer of crude, showed factory output slowed and retail sales declined as the country continued to cope with lockdowns to stop the spread of Covid-19. 

In addition to worries about weakening demand, concerns about supply were assuaged somewhat as the Keystone Pipeline resumed operations after a leak was uncovered last week. It normally carries more than 600,000 barrels of oil a day from Canada to the U.S. 

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