Oil prices fell in early Asia trade on Tuesday, with investors anticipating lingering U.S. inflation and higher interest rates to depress consumer and industrial demand. Brent crude futures fell 44 cents, or 0.53%, to $83.27 a barrel by 0313 GMT.
U.S. West Texas Intermediate crude (WTI) slipped 51 cents, or 0.64%, to $79.29 a barrel. Both benchmarks fell less than 1% on Monday as U.S. Federal Reserve officials said they were awaiting more signs of slowing inflation before considering interest rate cuts.
“Fears of weaker demand led to selling as the prospect of Fed rate cut became more distant,” said analyst Toshitaka Tazawa at Fujitomi Securities. Fed Vice Chair Philip Jefferson said on Monday it was too early to tell whether the inflation slowdown is “long lasting,” while Vice Chair Michael Barr said restrictive policy needs more time.
Atlanta Fed President Raphael Bostic said it will “take a while” for the central bank to be confident that a price growth slowdown is sustainable. Lower interest rates reduce borrowing costs, freeing up funds that could boost economic growth and demand for oil. On the other hand, the market appeared little affected by political uncertainty in two major oil-producing countries.
