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The Brent crude oil futures fell 85 cents, or 1.2%, to $ 67.86 a barrel at 1005 GMT. It fell 1.1% on Tuesday after briefly surpassing $ 70 at the start of the session.
US West Texas Intermediate (WTI) crude oil futures fell 90 cents, or 1.3%, to $ 64.59 a barrel after falling 1.2% on Tuesday.
Brent’s surge to $ 70 was due to optimism about the reopening of the US and European economies among the world’s largest oil consumers. However, it later withdrew on fears of a slowdown in fuel demand in Asia as COVID-19 cases increased in India, Taiwan, Vietnam and Thailand, sparking a new wave of restricted mobility.
“Yesterday’s trade again proved that $ 70 indicates irrational exuberance,” said Vandana Hari, energy analyst at Vanda Insights.
“Assessing the global demand picture remains challenging as reopenings and restrictions around the world are likely to be the most varied since the pandemic began,” said Hari.
The uncertainties surrounding inflation also led investors to reduce the risk of riskier assets like oil. “There’s a broader risk-off game,” said Westpac senior economist Justin Smirk.
Smirk said speculation that the Federal Reserve might raise interest rates due to fears of inflation weighed on growth prospects and, with it, commodity demand.
“The Fed is very serious (about holding rates) but the market is speculating on past moves,” he said.
The Fed has announced that interest rates will stay at their current low levels through 2023, although futures markets show investors believe that rates may rise through September 2022.
Investors will also be looking for the latest US crude oil and product stock data from the US Energy Information Administration due Wednesday.
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