Why does the price of oil go up when interest rates are cut?

Answer 1

Mr. Jello is right. The oil trade is denominated in US Dollars. When the fed cuts interest rates, it makes the dollar less attractive to investors, as investors can get better rates elsewhere, such as New Zealand. As they sell their dollars, it lowers the value of the dollar and thus you need more dollars to purchase goods - in this case crude oil. If the fed raised rates, it would make the dollar more attractive to investors, thus increasing the value of the dollar and lowering the price of goods, thus oil would drop.

Answer 2

Cuts in interest rates, means that more money is available in the system for people and businesses to spend.

This is because the lower the interest rate the more money a borrower can afford or it reduces the cost of the loan leaving the extra money to spend.

The more the economy grows, the more oil is used.

Answer 3

The currency is worth less. When interest rates are cut, not only does the price of oil go up, but so does the price of foreign currency and all other commodities.

Answer 4

Anticipates an increase in demand as a result of increased ecomomic activity that a rate decrease tends to bring on