Oil prices fell for a second day on Wednesday on fears that rising US coronavirus cases and inflation could lead to the US Federal Reserve raising interest rates, which could restrict economic growth.
Brent crude futures fell 57 cents, or 0.8%, to $ 68.14 a barrel at 0642 GMT. It was down 1.1% on Tuesday after rising above $ 70 in the previous session.
U.S. West Texas Intermediate (WTI) crude futures were down 61 cents, or 0.9%, at $ 64.88 a barrel, down 1.2% on Tuesday.
Brent rose to $ 70 on expectations that the U.S. and European economies will reopen among the world’s largest oil consumers. It backtracked on fears that rising COVID-19 cases in India, Taiwan, Vietnam, and Thailand could reduce fuel demand in Asia, triggering a new wave of restrictions.
“Yesterday’s trade proved once again that $ 70 represents irrational energy,” said Vandana Hari, energy analyst at Vanda (Nasdaq: VNDA) Insights in Singapore.
“Yesterday’s trade again proved that $ 70 represents irrational energy,” said Vandana Hari, energy analyst at Vanda (Nastok: VNDA) Insights in Singapore.
“Evaluating the global demand picture is challenging because reopening and restrictions around the world are very different from the onset of the epidemic,” Harry said.
Uncertainty about inflation also prompted investors to reduce exposure to risky assets such as oil.
Justin Smirk, a senior economist at the West Bank, said: “There is a vast dangerous drama going on.
Smirk speculated that inflation fears could change the outlook for growth and demand for commodities, raising the Federal Reserve’s rates.
Smirk speculated that inflation fears could change the outlook for commodity growth and demand, raising the Federal Reserve rates.
“The central bank is very serious (about keeping rates low), but speculation is rife about the market’s earlier movement,” he said.
The central bank has indicated that interest rates will remain at their current low levels by 2023, although futures markets expect investors to raise rates by September 2022.
The weak U.S. Despite the dollar came lower oil prices, which were 4-1 / 2 lower against a basket of coins. A weak dollar supports the price of oil cheaper and crude for holders of other currencies.
The U.S. on Wednesday. Energy Information Management’s latest U.S. Investors will also look at the data on crude and product stocks.
U.S. Petroleum Company’s data on Tuesday showed that crude inventories rose 620,000 barrels in the week ended May 14, while gasoline stocks fell 2.8 million barrels and filtered stocks fell 2.6 million barrels, according to two market sources.
According to a Reuters poll, the rise in crude stocks was lower than analysts estimated at 1.6 million barrels, while the decline in petrol and distilled stocks was larger than expected.