The market also fell as U.S. crude oil and gasoline inventories rose last week, according to market sources citing figures from the American Petroleum Institute (API) on Tuesday. Analysts expected a decline.
Brent crude futures were down 87 cents, or 1.1%, at $82.01 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 81 cents, or 1%. , at $77.85 at 12:55 GMT. Both benchmarks fell about 1% on Tuesday.
“Crude prices are under pressure from softening fundamentals, with OPEC+ likely extending production cuts at its June meeting to support prices,” said Ole Hansen, Saxo’s head of commodities strategy.
Physical crude markets have weakened and, in another sign that concerns over rapid and tight supply are easing, the premium of the first month’s Brent contract over the second, known as backwardation, is near its lowest level since January. “The view on the fundamental outlook remains bleak,” said Tamas Varga of oil broker PVM, adding: “The timeline for a Fed rate cut is ambivalent at best.” Fed policymakers said Tuesday that the U.S. central bank should wait several more months to ensure inflation is truly back on track to its 2% target before cutting rates. Higher borrowing costs can slow economic growth and pressure oil demand.
Investors await the minutes of the Fed’s latest policy meeting and, following API data, the latest official US oil inventory figures from the Energy Information Administration (EIA), due later on Wednesday.
“Federal Open Market Committee (FOMC) minutes will be scrutinized for the Fed’s assessment of erratic inflation in the first quarter and clues on the timing and magnitude of potential interest rate cuts in 2024,” ANZ analysts said in a report.
