Oil prices dropped by nearly $2 a barrel after another round of remarks from Federal Reserve Chair. Jerome Powell fanned worries U.S. interest rate hikes wouldslow economic growth.
Brent crude futures settled at $110.05 a barrel, falling$1.69, or 1.5%. U.S. West Texas Intermediate (WTI) crude futures settled at $104.27 a barrel, down $1.92, or 1.8%.
Powell said the Fed’s focus on curbing inflation was “unconditional” and the labor market was unsustainably strong; comments that stoked fears of more rate hikes.
Also, high gasoline prices could be starting to slow demand, said Robert Yawger, director of energy futures at Mizuho in New York.
That’s definitely worked its way into the conversation,” said Yawger, adding he thought gasoline still had room to rise. U.S. retail prices are currently averaging $4.94 a gallon, down about 10 cents from the peak, according to AAA.
Official weekly estimates for U.S. oil inventories were scheduled to be released on Thursday but technical problems will delay those figures until next week, the U.S. Energy Information Administration said, without giving a specific timeline.
OPEC and allied producing countries including Russia will likely stick to a plan for accelerated output increases in August in hopes of easing crude prices and inflation as U.S. President Joe Biden plans to visit Saudi Arabia, sources said.
The group known as OPEC+ agreed at its last meeting on June 2 to boost output by 648,000 barrels a day in July, or 7% of global demand, and by the same amount in August, up from the initial plan to add 432,000 bpd a month over three months until September.