Oil in New York slid more than 5% after Federal Reserve Chair Jerome Powell said the strong U.S. economy may warrant ending the central bank’s asset purchases sooner than planned next year.
Powell’s comments during a Senate Banking Committee hearing in Washington moved financial markets Tuesday as investors bet that a looming end to the taper could lead to an increase in interest rates. While tighter monetary policy can be a sign of economic strength, it’s typically bearish for commodities. West Texas Intermediate crude futures briefly dropped below $65 a barrel for the first time since August during the session, while the global benchmark Brent also tumbled.
The oil market is also continuing to weigh the impact of the omicron variant of the Covid-19 virus on demand and what OPEC+ may decide to do in response when the producer group meets later this week. New travel restrictions threaten the rebound in global crude consumption that has underpinned this year’s price rally.
