Prices also fell after Federal Reserve Chairman Jerome Powell warned that the economy could be hurt by attempts to reduce inflation.
Brent crude oil lost $2.31, or 2%, to settle at $111.93 a barrel, and U.S. West Texas Intermediate (WTI) crude oil lost $1.8, or 1.6%, to settle at $112.40 a barrel.
Mr Powell hinted that there might be some economic pain in bringing inflation down. The US central bank “will continue to push” to tighten US monetary policy until it is clear that inflation is coming down, he said.
“Some of these comments have dampened the enthusiasm of buyers on the oil side,” said Price Futures Group analyst Phil Flynn.
The administration of US President Joe Biden will allow US oil company Chevron Corp to negotiate with the government of Venezuelan President Nicolas Maduro from Tuesday, Reuters reported, citing sources. There is no final US decision yet on whether to renew Chevron’s current limited license to operate in Venezuela, the source said.
Oil prices have generally risen as Russian supply is squeezed by bans from several countries and an economic slowdown due to sweeping sanctions imposed on Moscow by the United States and its allies.
Russia’s output fell 9% in April, and the country, which is part of the OPEC+ group, produced well below levels required by a deal to gradually ease record output cuts made during the worst of the pandemic. in 2020.
This month, non-Russian deliveries to the Polish port of Gdansk hit their highest level in at least seven years as refiners in eastern Germany and Poland switched suppliers.
“At the end of the day, it’s a supply story,” said Fawad Razaqzada, an analyst at City Index. “Unless OPEC and its allies increase production and quickly, it’s hard to see how prices can come down significantly.”
EU foreign ministers on Monday failed in their bid to pressure Hungary to lift its veto of the proposed oil embargo. But some diplomats are now pointing to the May 30-31 summit as the time for agreement on a phased ban on Russian oil.
US crude and gasoline inventories fell last week, market sources said, citing figures from the American Petroleum Institute on Tuesday. Data from the US government are expected on Wednesday. [API/S] [EIA/S]
(The article is corrected to remove the bullet point and paragraph about the Brent discount to WTI, as the first month Brent futures are for July while the first month WTI futures are for June )