Oil prices dropped over $2 a barrel on Wednesday to their lowest in three weeks, on worries that surging Covid-19 cases in Asia would dent demand for crude and US inflation fears
By Scott DiSavino
NEW YORK (Reuters) -Oil prices dropped over $2 a barrel on Wednesday to their lowest in three weeks, on worries that surging COVID-19 cases in Asia would dent demand for crude and that U.S. inflation fears could prompt the Federal Reserve to slow economic growth with interest rate hikes.
Traders also cited rumors that the Iran nuclear talks were making progress, which could boost global crude supplies and depress prices.
Brent futures fell $2.05, or 3.0%, to settle at $66.66 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.13, or 3.3%, to settle at $63.36. Earlier in the day, WTI was down more than 5%.
That was the lowest close for both benchmarks since April 27.
On Tuesday, Brent rose to a 10-week high over $70 a barrel in intraday trade on optimism oil demand would surge with the reopening of U.S. and European economies. It retreated on fears of slowing fuel demand in Asia where surging COVID-19 cases prompted new restrictions in India, Taiwan, Vietnam, and Thailand.
"The global picture for demand is probably the most divided it has been since the start of the pandemic, with an improving demand picture in the West versus a deteriorating outlook in Asia," said Sophie Griffiths, market analyst with OANDA, noting the mixed picture fed volatility.
Analysts have said Iran could provide about 1 million to 2 million barrels per day (BPD) in additional oil supply if a deal is struck.
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