Oil prices slumped over 2% on Tuesday on signals that central banks may not be done with interest rate hikes, while investors awaited data that could shed light on U.S. fuel consumption during the peak summer driving season.
Brent crude futures settled down $1.92, or 2.6%, at $72.26 a barrel. U.S. West Texas Intermediate (WTI) futures dropped $1.67, or 2.4%, to $67.70.
Both contracts are trading broadly within a $10 range traced since early May. Oanda analyst Craig Erlam said prices were mainly at the mercy of “the ever-changing expectations for interest rates”.
European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will require the bank to avoid declaring an end to rate hikes. Higher interest rates can weigh on economic activity and oil demand.”
Despite concerns for the slowing economy in Europe, they are going to put the pedal to the metal with In the United States, U.S. consumer confidence increased in June to the highest level in nearly 1-1/2 years amid renewed labor market optimism.
But the upbeat data suggested the Federal Reserve will likely have to continue raising interest rates to slow demand in the overall economy. The U.S. central bank, which has raised its policy rate by 500 basis points since March 2022, signalled this month that two additional rate hikes were warranted this year.