Oil sinks as Fed poised to weigh interest rate increase – Houston Chronicle

The possibility of a U.S. interest-rate increase is roiling oil markets.Federal Reserve leaders will meet later this week to consider the first rate increase since the early days of the financial crisis, ending seven years of record-low interest rates that kept credit flowing to borrowers in the aftermath of the collapse of Lehman Brothers in September 2008.Analysts say it’s unclear whether the U.S. central bank will tighten the nation’s money supply after its two-day meeting concludes on Thursday or sometime before the end of the year, or after that. But when it does, it will be a sign that policymakers believe the U.S. economy has improved enough to withstand higher borrowing costs.Higher interest rates, though, would come at a bad time for U.S. oil companies, which have taken out more than $200 billion in high-risk loans to fuel a domestic shale oil bonanza, only to send away hundreds of drilling rigs and lay off thousands of workers this year.”The last thing energy companies need is higher costs,” said James D’Agostino Jr., former chairman of Encore Bancshares in Houston. “They’re trying to conserve cash.”


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