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Brent crude futures fell by 41 cents, or 0.5%, to $81.93 a
barrel by 1223 GMT, while U.S. West Texas Intermediate crude
futures (WTI) were lower by 39 cents, or 0.51%, at $76.65.
The Brent and WTI contracts fell from near three-week highs on
Tuesday, dropping by 1.5% and 1.4%, respectively.
The premium of front-month April Brent futures over September
contracts - known as backwardation, and a sign of a tightly
supplied market - hit its highest since Oct. 31 on Monday at
$3.64 a barrel, though has since cooled off to around $3.37.
"Oil prices took yesterday as day of correction which was
inspired by a lack of any further conflict news from the world's
clash points as markets had to settle on what was bothering the
macro world," PVM analyst John Evans said in a note published on
Wednesday morning.
Concerns that rate cuts by the Federal Reserve could take longer
than thought have weighed on the outlook for oil demand. U.S.
inflation data last week pushed back expectations for an
imminent start to the Fed's easing cycle, with economists polled
by Reuters now forecasting a cut in June.
"Investors yet again felt a hiccup in pivot prediction as to
when the most important central bank of all, the Fed, might
alter course," Evans added.
Minutes from the Fed's January monetary policy meeting, due at
1900 GMT, will offer further clues on the timing of potential
interest rate cuts.
But Houthi attacks on commercial vessels in the Red Sea and Bab
al-Mandab strait have continued to stoke concerns over freight
flows through the critical waterway. Drone and missile strikes
have hit at least four vessels since last Friday.
Diplomacy in the Middle East continues to face setbacks.
Washington on Tuesday again vetoed a draft United Nations
Security Council resolution on the Israel-Hamas war, blocking a
demand for an immediate humanitarian ceasefire. The U.S. is
instead pushing for the Security Council to adopt a resolution
tying a ceasefire to the release of Israeli hostages by Hamas.
(Reporting by Robert Harvey in London, Mohi Narayan in New
Delhi, Andrew Hayley in Beijing; Editing by David Evans)
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