How Fed Rate Hikes Should Impact Oil Prices

Are you wondering how Fed rate hikes might impact oil prices? In isolation, monetary tightening should be a threat to oil prices for two key reasons. However, it is important to note that the market for oil is global in nature with many more factors at play, and so we should be careful to not oversimplify the matter. Nevertheless, tightening monetary policy can serve to strengthen the U.S. dollar, and a stronger dollar buys more oil per dollar. The other key impact Fed rate hikes can have on oil is due to the drag higher rates bring to the economy by raising the cost of capital. The result of any drag on an economy is a likely commensurate drag on energy demand, unless robust economic growth justifies tightening. Now, the manner in which the Fed is currently going about raising interest rates, gradually, should have limited impact and could be justified by economic growth and price inflation. Also the energy market is global in nature, and therefore, the impact of the Fed is diluted. See the whole story here: How Fed Rate Hikes Could Impact Oil Prices.

Energy Relative Shares	04-28-16
SPDR S&P 500 (NYSE: SPY)	+0.1%
United States Oil (NYSE: USO)	+0.3%
iPath S&P GSCI Crude Oil (NYSE: OIL)	+0.0%
United States Natural Gas (NYSE: UNG)	-2.3%
Energy Select Sector SPDR (NYSE: XLE)	-0.2%
SPDR S&P Oil & Gas E&P (NYSE: XOP)	-0.4%
Market Vectors Oil Services (NYSE: OIH)	-0.2%
Exxon Mobil (NYSE: XOM)	-0.3%
Chevron (NYSE: CVX)	+0.1%
B.P. (NYSE: BP)	-0.1%
TOTAL S.A. (NYSE: TOT)	+0.0%
ConocoPhillips (NYSE: COP)	+0.3%
Phillips 66 (NYSE: PSX)	-0.6%
Occidental Petroleum (NYSE: OXY)	-0.9%
Schlumberger (NYSE: SLB)	-0.1%
Weatherford Int’l (NYSE: WFT)	-0.8%
Halliburton (NYSE: HAL)	-0.1%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only. Article interests energy investors including Exxon Mobil (NYSE: XOM), BP (NYSE: BP), PetroChina (NYSE: PTR), Petrobras (NYSE: PZE), Royal Dutch Shell (OTC: RYDAF.PK), Total (NYSE: TOT), Chevron (NYSE: CVX), Repsol (OTC: REPYY.PK), ConocoPhillips (NYSE: COP), Eni SpA (NYSE: E), Sasol (NYSE: SSL), Encana (NYSE: ECA), Suncor (NYSE: SU), Imperial Oil (AMEX: IMO), Statoil (NYSE: STO), Cenovus (NYSE: CVE), Transocean (NYSE: RIG), Penn West Petroleum (NYSE: PWE), Continental Resources (NYSE: CLR), Noble (NYSE: NE), Concho (NYSE: CXO), Diamond Offshore (NYSE: DO), Ensco (NYSE: ESV), Whiting Petroleum (NYSE: WLL), Nabors (NYSE: NBR), Pride International (NYSE: PDE), Helmerich & Payne (NYSE: HP), QEP Resources (NYSE: QEP), Enerplus (NYSE: ERF), Rowan (NYSE: RDC), Cobalt (NYSE: CIE), Patterson UTI (Nasdaq: PTEN), SandRidge (NYSE: SD), Schlumberger (NYSE: SLB), Halliburton (NYSE: HAL), National Oilwell Varco (NYSE: NOV), Baker Hughes (NYSE: BHI), Weatherford International (NYSE: WFT), Cameron (NYSE: CAM), FMC Tech (NYSE: FTI), Oil States International (NYSE: OIS), Superior Energy (NYSE: SPN), Carbo Ceramics (NYSE: CRR), Helix Energy (NYSE: HLX), Pioneer (NYSE: PXD), CNOOC (NYSE: CEO), China Petroleum and Chemical (NYSE: SNP), Ecopetrol (NYSE: EC), Canadian Natural Resources (NYSE: CNQ), Apache (NYSE: APA), Anadarko (NYSE: APC), Devon (NYSE: DVN), EOG (NYSE: EOG), Chesapeake (NYSE: CHK).