Oil prices hold steady as dollar weakens

Oil prices were relatively stable after the U.S. dollar retreated ahead of the U.S. Federal Reserve’s crucial interest rate decision.

Brent crude futures saw a 3% increase this week, rising to a total of 18 cents, or 0.25%, to hit $75.52 per barrel. U.S. West Texas Intermediate crude futures rose 17 cents, or 0.25%, to settle at $69.84.

A weak dollar increases demand for oil because it makes the commodity more affordable for those holding other currencies.

Oil markets are seeking direction from the U.S. Federal Reserve’s Federal Open Market Committee, which will announce its final decision on interest rates.

The expected 25 basis point rate hike is a turnaround from the sharp 50 basis point hike expected before the recent banking turmoil caused by the stagnation of two regional banks.

Given what has happened in the past two weeks, it would be a big shock if the Fed returned to raising rates more now.

Oil prices drop on fears of interest rate hikes

On the heels of a U.K. inflation increase in February, oil prices declined the following day, increasing anxieties regarding potential additional interest rate increases just before the Bank of England’s next interest rate declaration.

On Tuesday, information from the American Petroleum Institute raised concerns over oil demand. According to sources, the data revealed a sudden increase in United States crude stores in the last week, contradicting predicted decreases.

Official data from the Energy Information Administration, the U.S. Department of Energy’s statistical arm, will become public Wednesday morning.

Brent prices hit their lowest level since 2021 last week on fears that a fall in bank stocks could stoke global volatility and dampen demand for the fuel. However, Credit Suisse’s emergency bailout over the weekend helped lift oil prices.