Oil Prices Falling on High Rate of Covid-19 Cases in Asia And Inflation Concerns

Oil prices fell for the second consecutive session on Wednesday, May 19, due to renewed demand concerns with the rise in cases of Coronavirus in Asia and fears of high inflation, which may push the US Federal Reserve to raise interest rates, which may limit economic growth.

Brent crude futures fell 73 cents, equivalent to 1.1%, to $67.98 a barrel. It had fallen 1.1% at the settlement on Tuesday, after rising for a short period of more than $70 earlier in the session.

US West Texas Intermediate crude futures fell 77 cents, or 1.2%, to $64.72 a barrel, after losing 1.2% yesterday.

The rise in Brent crude to $70 was driven by optimism about the resumption of economic activities in the United States and Europe, which are two of the world’s largest oil consumers. But it later softened amid fears of slowing fuel demand in Asia as COVID-19 cases soared in India, Taiwan, Vietnam, and Thailand, prompting a new wave of restrictions on movement.

The uncertainty over inflation has also caused investors to reduce their exposure to riskier assets such as oil.