Oil prices fell in European trade Friday after the U.S. Federal Reserve’s decision to keep interest rates unchanged left markets in the lurch.
Investors are now grappling with uncertainty about the timing of a U.S. interest-rate increase. The late Thursday decision weakened the greenback sharply, which should be supportive for oil prices, but the macroeconomic concerns behind the decision are having a bearish impact on the oil market.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $46.36 a barrel, down $0.54, or 1.2% in the Globex electronic session. December Brent crude on London’s ICE Futures exchange eased $0.13 to $49.73 a barrel.
“The outlook abroad appears to have become more uncertain of late, and heightened concerns about growth in China and other emerging-market economies have led to notable volatility in financial markets,” Fed Chairwoman Janet Yellen said in a statement.
She said overall financial conditions are now tighter, and given the “significant economic and financial interconnections between the United States and the rest of the world, the situation abroad bears close watching.”
A U.S. rate increase was expected to be bearish for oil and commodities prices in general, but with the decision on hold, commodities markets are temporarily supported. Continued market speculation of a rate increase will however feed price volatility in coming weeks.