MELBOURNE: Oil prices dropped on Wednesday, after a mixed finish in the previous session, amid worries that soaring coal and natural gas prices in China, India and Europe will stoke inflation and slow global growth, reducing oil demand.
A strong U.S. dollar, trading near a one-year high, also weighed on oil prices, as it makes oil more expensive for those holding other currencies, report agencies.
Brent crude futures fell 70 cents, or 0.8%, to $82.72 a barrel, extending a 23 cent loss on Tuesday.
The International Monetary Fund on Tuesday cut its growth outlooks for the United States and other major economies on worries supply chain disruptions and cost pressures are holding back the global economic recovery from the coronavirus pandemic.
Commonwealth Bank analysts highlighted the IMF’s concern that “momentum has weakened and uncertainty has increased”.
However, oil watchers are still focused on whether soaring gas and coal prices will lead to more demand for oil products for power generation.
“There are growing expectations that the high prices for gas and thermal coal are likely to boost demand for alternative fuels such as diesel and fuel oil,” ANZ Research analysts said in a note.