Crude oil prices began Thursday with a decline after the U.S. Federal Reserve signaled Wednesday that it would stay committed to tightening monetary policy in 2019, which led to stock market selloffs in major economies.
International benchmark Brent crude was trading at $56.31 per barrel at 0600 GMT with a 0.3 percent loss after it ended Wednesday at $56.51 a barrel.
American benchmark West Texas Intermediate (WTI) was at $47.12 a barrel at the same time -- a 0.5 percent decline, after previously closing at $47.38 per barrel.
Rising global oil output and gloomy prospect for major economies also keep downward pressure on prices. Global oil demand is under pressure with lower growth outlook, as major and emerging economies are expected to have a slower growth rate in 2019 compared to this year. In the global oil market, glut of supply remains strong with the U.S.' crude oil production remaining near a record high level of 11.6 million barrels per day for the week ending Dec. 14, according to the Energy Information Administration on Wednesday.
The U.S. Federal Reserve, as widely expected, raised its benchmark interest rate Wednesday by 25 basis points, which marked the fourth rate hike this year.
The central bank signaled it could make two more rate hikes, instead of three, in 2019; which means it will continue increasing interest rates next year.
The Fed could even make a third rate hike in 2019 if macroeconomic data in the U.S. comes in strong next year to support it.
"The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term," the Federal Open Market Committee (FOMC) said in a statement.
The Fed Chair Jerome Powell announced Wednesday in a news conference after the conclusion of the two-day FOMC meeting that monetary policymaking is "a forward-looking exercise."
"There’s real uncertainty about the pace and the destination of further rate increases, and we’re going to be letting incoming data inform our thinking about the appropriate path,” he said.
With investors anticipating further rate hikes, stock markets in major economies posted losses.
The Dow Jones and the S&P 500 in the New York Stock Exchange both fell 1.5 percent on Wednesday's closing. Nasdaq ended with a 2.2 percent decline.
In Asia, Nikkei 225 closed Thursday with a 2.8 percent loss. At 0640 GMT, Hang Seng in Hong Kong was down 1.3 percent, while Shanghai Composite lost 0.7 percent for the day.
If the Fed signals more rate hikes next year, this would increase the value of the U.S. dollar against other currencies. Since oil prices are indexed to the greenback, increases in the value of the U.S. dollar would lower crude demand around the world.