Oil falls as looming U.S. rate hikes spook investors | Reuters

Oil falls as looming U.S. rate hikes spook investors | Reuters

Oil prices fell on Thursday as the U.S. dollar strengthened following signs that the Federal Reserve will tighten monetary policy soon in the world's biggest oil user.

Futures pulled back amid a broader decline in financial markets after the Fed telegraphed a March interest rate increase and as the dollar climbed against its major peers. Dollar-denominated oil becomes more expensive for buyers using other currencies when the greenback gains. read more

Brent crude futures were down 31 cents, or 0.6%, to $89.44 a barrel at 0720 GMT, after earlier falling by as much as 1.1% to $89. Brent climbed 2% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were down 58 cents, or 0.6%, to $86.77 a barrel, after falling by as much as 1.2% to $86.34. WTI gained 2% in the previous session.

"It could be a strong U.S. dollar at play after the Federal Open Markets Committee signalled rates will rise," said Commonwealth Bank analyst Vivek Dhar.