Federal Reserve Chairman Jerome Powell cautioned that the economy could receive damage from trying to reduce inflation; hence, prices fell.
For the first time since May 2020, the Brent international benchmark dropped below U.S. West Texas Intermediate crude. Refiners worldwide have raced to find alternative energy supplies after Russia invaded Ukraine. U.S. reserves are declining; this has raised the price for U.S.-based crudes, spoke Andrew Lipow, president of Lipow Oil Associates in Houston.
Brent crude dropped $2.31, or 2%, to settle at $111.93 a barrel; U.S. West Texas Intermediate (WTI) crude declined $1.8, or 1.6%, to settle at $112.40 a barrel.
Powell indicated there could be some economic pain implicated in bringing inflation down. The U.S. central bank will “keep pushing” to pull U.S. monetary policy until it is clear that inflation is declining.
As soon as Tuesday, Reuters reported, U.S. President Joe Biden’s administration will allow U.S. oil company Chevron Corp (NYSE: CVX) to negotiate with Venezuelan President Nicolas Maduro’s government. The source said there is no definitive U.S. decision yet to renew Chevron’s current limited license to operate in Venezuela.
Oil Prices Are Still Rising
Oil prices have generally increased as bans squeeze Russian supply from several countries and an economic downturn because of broad sanctions on Moscow imposed by the United States and partners.
Russia’s production fell by 9% in April. The country, part of the OPEC+ group, produced far under levels required under a deal to gradually ease record output cuts made throughout the worst of the epidemic in 2020.
This month, non-Russian deliveries into the Polish port of Gdansk hit the most elevated in at least seven years as refiners in eastern Germany, and Poland switched.