Crude oil prices dropped on Thursday after the Federal Reserve recorded a 25 basis points rate rise amid worries around the US financial sector’s concern over decreasing oil consumption. Brent crude sold at $76.27 per barrel, representing a 0.55% reduction from the previous trading session’s closing price of $76.69 per barrel.
At the same time, the American benchmark West Texas Intermediate (WTI) was trading at $70.45 a barrel, down 0.63% from the previous session’s closing of $70.9.
Despite a financial crisis that saw four banks fail in a matter of weeks, the Fed hiked its benchmark interest rate by another 25 basis points on Wednesday. Fed Chair Jerome Powell said Wednesday that banking issues in the US could undermine the whole system if they remain unchecked.
‘History has shown that isolated banking problems if left unaddressed, can undermine confidence in healthy banks and threaten the ability of the banking system as a whole to play its vital role in supporting the savings and credit needs of households and businesses,’ he said.
‘The failure of a small bank, like a community bank, can likewise trigger a run on other banks, and failure of that bank could lead to a systemic failure,’ Janet Yellen said before the Financial Services and General Government Subcommittee at the US Senate.
The growth of commercial crude oil stockpiles in the United States, the world’s largest oil consumer, also placed downward pressure on prices, since the country’s demand was perceived to be low.
According to statistics issued late Wednesday by the Energy Information Administration (EIA), commercial crude oil stocks in the United States climbed by 1.1 million barrels to 481.2 million barrels for the week ending March 17.
The market anticipated a drop of 1.45 million barrels.
