Summary
- API reports crude and gasoline stocks rise, sources say
- UK inflation falls less than expected
- Fed minutes, EIA inventory report awaited
LONDON, May 22 (Reuters) â Oil prices fell on Wednesday, retreating for a third straight day on expectations that the Federal Reserve might keep U.S. interest rates higher for longer due to sustained inflation, potentially affecting fuel use in the worldâs largest consumer.
The market also slipped as U.S. crude oil and gasoline inventories rose last week, according to market sources citing American Petroleum Institute (API) figures on Tuesday. Analysts expected them to decline.
Brent crude futures were down 64 cents, or 0.8%, at $82.24 a barrel, while U.S. West Texas Intermediate crude (WTI) dropped 65 cents, or 0.8%, to $78.01 by 1010 GMT. Both benchmarks shed more than 1% earlier in the session.
âThe view on the fundamental outlook remains grim,â said Tamas Varga of oil broker PVM, adding, âThe timing of a Fed rate cut is ambivalent at bestâ.
Oil settled about 1% lower on Tuesday.
Physical crude markets have been weakening and in another sign that concern of tight prompt supply is easing, the premium of Brentâs first-month contract over the second , known as backwardation, is close to its lowest since January.
Fed policymakers said on Tuesday the U.S. central bank should wait several more months to ensure that inflation really is back on track towards its 2% target before cutting interest rates.
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Higher borrowing costs can slow economic growth and pressure oil demand.
Investors are awaiting minutes from the Fedâs last policy meeting and, following the API data, the latest official U.S. oil inventory figures from the Energy Information Administration (EIA) due later on Wednesday.
âThe Federal Open Market Committee (FOMC) minutes will be scrutinised for the Fedâs assessment of bumpy Q1 inflation and clues on the timing and extent of potential interest rate cuts in 2024,â ANZ analysts said in a report.
Inflation in Britain fell by less than expected in April and a key core measure barely dropped, figures showed on Wednesday, prompting investors to pull bets on a rate cut next month.
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