Oil prices fell sharply on Wednesday to extend losses from the previous session as growing inflation concerns raised the specter of a less accommodative U.S. Federal Reserve, which could get in the way of economic recovery. The potential of Iranian supply returning also weighed on prices.
Brent crude futures for July settlement fell 1.7 percent to $67.52 a barrel, after having dropped 1.1 percent on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures for June delivery were down almost 2 percent at $64.19 a barrel, after a 1.2 percent fall the previous day.
Inflation concerns returned to the fore after data showed U.K. inflation more than doubled to 1.5 percent in April.
Eurozone inflation also accelerated, as initially estimated to a two-year high in April, driven by higher energy prices, final data from Eurostat showed.
Inflation rose to 1.6 percent in April from 1.3 percent in March. The annual rate came in line with the flash estimate published on April 30. This was the highest rate since April 2019, when inflation was 1.7 percent.
Investors wait for more clues on policymakers’ views on inflation when the U.S. Federal Reserve releases minutes of its most recent policy meeting later in the day.
Oil prices are also coming under pressure amid reported progress on talks between the United States and Iran to revive a deal limiting its nuclear program, which could lead to a lifting of sanctions and a resurgence of Iranian oil exports.
Analysts, however, say that any increase in Iranian oil supply will likely be more gradual.
Market participants await the latest U.S. crude and products stocks data from the U.S. Energy Information Administration later in the day after the American Petroleum Institute reported late Tuesday that crude inventories rose by 620,000 barrels for the week ended May 14.
The material has been provided by InstaForex Company – www.instaforex.com