Crude oil prices decline in early trade

23 Mar 2023 , 09:30 AM

After three sessions of gains, oil prices declined on Thursday when U.S. Federal Reserve Chair Jerome Powell reiterated his commitment to containing inflation, including the potential for additional interest rate increases.

Brent crude futures were down 80 cents, or 1%, to $75.89 per barrel, while WTI was down 84 cents, or 1.2%, to $70.06.

On Wednesday, both crude benchmarks reached their highest close since March 14.

Powell added on Wednesday that the stress on the banking sector may lead to a credit crisis with ‘severe’ repercussions for the US economy, which officials at the US central bank predicted will contract even more this year than previously anticipated.

As a method to lessen the commotion brought on by two significant bank failures this month, U.S. Treasury Secretary Janet Yellen told senators on Wednesday that she has not thought about or discussed ‘blanket insurance’ to U.S. banking deposits without consent from Congress.

As investors awaited the Fed’s decision on rate hikes on Wednesday, the bank crises over the past week have generated volatility trade in riskier assets like oil.

The central bank’s policy-setting committee unanimously decided to increase interest rates by another quarter of a percentage point, bringing the benchmark rate up to the range of 4.75% to 5.00%.

Yet in doing so, it changed its forecast from being inflation-hawkish to being more cautious to take into account the possibility that changes in bank conduct would have an impact similar to the Fed’s own rate hikes.

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