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Brent crude futures fell by $1.08, or 1.3%, to $82.63 a barrel
by 1037 GMT. U.S. West Texas Intermediate crude (WTI) futures
for June, which are set to expire on Tuesday, slipped by $1.07
cents, or 1.3%, to $78.73.
The more active July contract lost $1.02, or 1.3%, to $78.28.
Both benchmarks fell by nearly 1% on Monday after U.S. Federal
Reserve officials said they were awaiting more signs of slowing
inflation before considering interest rate cuts.
"Fears of weaker demand led to selling as the prospect of a Fed
rate cut became more distant," said analyst Toshitaka Tazawa at
Fujitomi Securities.
Fed Vice Chair Philip Jefferson said it was too early to tell
whether the inflation slowdown is long lasting while Vice Chair
Michael Barr said restrictive policy needs more time. Atlanta
Fed President Raphael Bostic said it will "take a while" for the
central bank to be confident that a price growth slowdown is
sustainable.
All in all, the Fed officials' comments pointed to interest
rates staying higher for longer than markets previously
expected. That has implications for the oil market because
higher borrowing costs tie up funds in a blow to economic growth
and demand for crude.
The market appeared largely unaffected by political uncertainty
in two major oil-producing countries.
Iranian President Ebrahim Raisi, a hardliner and potential
successor to Supreme Leader Ayatollah Ali Khamenei, died in a
helicopter crash on Sunday. Separately, Saudi Arabia's Crown
Prince Mohammed Bin Salman deferred a trip to Japan because of
the health of his father, the king.
"The (oil) complex continues to lack major bullish or bearish
influences to nudge prices out of the current narrow band, which
has become entrenched since the start of May," said Vandana Hari,
founder of Vanda Insights.
Investors are focusing on supply from the Organization of the
Petroleum Exporting Countries (OPEC) and its allies, together
known as OPEC+. They are scheduled to meet on June 1 to set
output policy, including whether to extend some members'
voluntary supply cuts of 2.2 million barrels per day.
OPEC+ could extend some voluntary cuts if demand fails to pick
up, people with knowledge of the matter have told Reuters.
(Reporting by Noah Browning; Additional reporting by Deep Vakil
in Bengaluru, Yuka Obayashi in Tokyo and Trixie Yap in
Singapore; Editing by David Goodman)
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