Oil fell as the potential for further rate hikes from the Federal Reserve bolstered concerns about a recession that would weaken demand.
West Texas Intermediate settled below $72 a barrel after Dallas Fed President Lorie Logan said the case for a break next month is unclear, raising expectations of an economic slowdown . Negotiations to raise the US government’s spending limit and avoid a catastrophic default are also weighing on sentiment.
“Crude oil is really struggling to keep up with other risk assets,” said Rebecca Babin, senior energy trader at CIBC Private Wealth, who attributed the move to a potential interest rate hike in June .
Crude oil prices have fallen about 10% this year as China’s slower-than-expected recovery from Covid-19 restrictions disappointed markets. UBS Group AG was the latest to cut its bullish oil price forecast, lowering its year-end outlook for Brent below $100 a barrel. That still implies a rebound in prices from current levels, with the bank forecasting a market shortfall of 1.5 million barrels a day in June.
Global oil demand rose by 3 million barrels a day to a record high in March, according to the Riyadh-based International Energy Forum. In Asia, refiners in South Korea and Taiwan recently bought millions of barrels of US crude, while India is considering replenishing its strategic hoard. Elsewhere, Angolan crude exports will rise to 1.2 million barrels per day in July, a nearly 20% jump from June’s plan.
Prices:
- WTI for June delivery fell 97 cents to settle at $71.86 a barrel in New York.
- Brent for July settlement was down $1.10 at $75.86 a barrel.
