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US oil prices fall amid warns of further rate hike

Oil prices fell more than 1 per cent today on demand concerns as the US Federal Reserve (Fed) kept its key interest rate unchanged and forecasted a smaller cut next year, Anadolu reported.

At 10:40 a.m. local time (07:41 GMT), Brent crude was trading at $95.84 per barrel, which is 0.15% lower than the price in the previous trading session ($95.99).

U.S. benchmark West Texas Intermediate (WTI) crude was trading at $88.70 per barrel at the same time. The price after closing the previous session at $88.96 per barrel fell by 0.29%.

Last week, the US Consumer Price Index (CPI) signalled a slowdown in inflation, reassuring investors that the Federal Reserve may soften interest rate hikes in the coming months. However, despite the gradual decline in prices, Federal Reserve Chairman Christopher Waller warned on Monday that fighting inflation is a long-term process and interest rates would “continue to rise.”

The Fed has raised interest rates by 375 basis points since March to manage price pressures. Prior to that, interest rates peaked at 25 basis points as the central bank cut rates to almost zero after the outbreak of the coronavirus pandemic in 2020.

Oil prices, indexed in US dollars, also came under pressure as the value of the currency rose. The dollar index, which measures its value against other currencies, rose 0.50 per cent to 106.69.

According to data released by the Energy Information Administration (EIA), commercial crude oil inventories in the United States fell by about 2.1 million barrels compared with the forecast of the American Petroleum Institute for a decline of about 5.2 million barrels.

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