Oil prices rise after U.S. Fed hikes rates, weakening the dollar

Oil prices rose in early Asian trade on Thursday after the U.S. Federal Reserve raised interest rates by 25 basis points, sending the dollar lower.

Brent crude futures rose 56 cents, or 0.7%, at $83.40 a barrel while West Texas Intermediate (WTI) U.S. crude futures rose 65 cents, or 0.8%, to $77.05 a barrel.

The Federal Reserve raised its target interest rate by a quarter of a percentage point on Wednesday, yet continued to promise "ongoing increases" in borrowing costs as part of its ongoing battle against inflation.

"Inflation has eased somewhat but remains elevated," the U.S. central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.

A weaker greenback makes U.S. dollar-priced oil less expensive for holders of other currencies, boosting demand.

The U.S. dollar last fell 0.3% in the session against a basket of currencies, at 101.15.

Prices are also rising in the backdrop of a Feb 5. ban on Russian refined products by the European Union.

EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products, after postponing a decision on Wednesday amid divisions between member states, diplomats said.

The European Commission proposed last week that from Feb. 5 the EU apply a price cap of $100 per barrel on premium Russian oil products such as diesel and a $45 cap per barrel on discounted products such as fuel oil.