Interest Rates

The Federal Reserve cut interest rates three times last year, brightening the prospects for continued economic growth and increases in energy demand, and additional rate cuts could be coming in 2025. But what do lower borrowing costs really mean for E&Ps, midstream companies, refiners and others in the energy industry? In today’s RBN blog, we will examine the impact of lower interest rates on energy companies and whether they might affect plans to boost output and build new infrastructure. 

RBN has documented many fundamental influences on crude oil prices including supply, demand and inventory levels as well as infrastructure constraints. One that we don’t often mention is the strength or weakness of the U.S. dollar. As with most international commodities - oil is bought and sold priced in U.S. dollars. As a result, a change in the value of the dollar relative to other currencies has an impact on oil prices. Likewise the dramatic fall in oil prices since June of 2014 has been mirrored by the dollar rising to levels not seen since 2003. Today we look at how oil prices are impacted by the value of the dollar.