Last updated: June 28, 2023, 12:36 AM IST
New York, United States of America (USA)
European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will force the bank to avoid declaring an end to rate hikes. (IReuters)
Brent oil futures fell $1.22, or 1.6%, to $72.96 a barrel at 12:46 p.m.
Oil prices fell more than 1% on Tuesday after signals the European Central Bank is not done with rate hikes, as investors awaited data that could shed light on US fuel consumption during the busy summer season.
Brent crude oil futures fell $1.22, or 1.6%, to $72.96 a barrel at 12:46 a.m. EDT (1646 GMT). US West Texas Intermediate (WTI) futures fell $1.10, or 1.6%, to $68.27.
Both contracts have been trading within the $10 range since early May. Oanda analyst Craig Erlam said prices were mainly at the mercy of “the ever-changing expectations for interest rates”.
European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will force the bank to avoid declaring an end to rate hikes. Higher interest rates could weigh on economic activity and demand for oil.
“Despite concerns about the slowing economy in Europe, they are turning the leaf to metal on interest rates and that is putting downward pressure on them,” said Phil Flynn, an analyst at Price Futures Group.
European equities also fell. [MKTS/GLOB]
US inventory data from the American Petroleum Institute industry group is expected at 4:30 p.m. EDT, followed by government data on Wednesday.[API/S] A Reuters poll found that U.S. inventories likely fell in the week to June 23. [EIA/S]
Brent’s six-month backwardation — a price structure where earlier-loaded contracts trade above later-loaded contracts — reached its lowest level since December and was barely positive, pointing to diminishing concerns about supply shortfalls.
For the two-month spread, the market is in shallow contango, the opposite price structure, indicating that traders are reckoning with a slight oversupply in the market.
Meanwhile, the market shrugged off the aborted mutiny by the Wagner mercenary group in Russia over the weekend, while Russian oil shipments remained on track.
“The latest geopolitical flare-up quickly pales into insignificance against persistent macroeconomic considerations,” said PVM’s Tamas Varga.
This is despite Saudi Arabia’s pledge to cut production from July.
Much will depend on whether Chinese demand for oil picks up in the second half, with Premier Li Qiang saying China will take steps to stimulate markets but giving details.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)
