Oil falls in price after global central banks raise key rates

Global oil prices fell slightly on December 16 morning after the increase in key rates by the central banks worldwide, Report informs referring to the auction data.

The price of February futures for Brent crude fell by 0.37% to $80.91 per barrel, January futures for WTI fell by 0.45% to $75.77.

On December 14, the US Federal Reserve (Fed) announced a 50 basis point increase in the base interest rate, to the level of 4.25-4.5% per annum, while the head of the regulator, Jerome Powell, said at a press conference that the Fed considers it expedient to keep the rate high until the decline in inflation is stable and sustainable.

On December 15, the results of regular meetings of the ECB and the Bank of England were announced. Both regulators raised key rates by 50 basis points to 2.5% and 3.5% respectively. In addition, the ECB lowered its forecast for GDP growth for 2023 to 0.5% from the September estimate of 0.9%. The inflation forecast was, on the contrary, raised for 2022 to 8.4% from September 8.1%, for 2023 to 6.3% from 5.5%, and for 2024 to 3.4% from 2.3%.

Thus, tightening monetary policy and raising rates in response to high inflation increases the risks of a recession. In such conditions, the demand for energy carriers falls.