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The
market also slipped as U.S. crude oil and gasoline inventories
rose last week, according to market sources citing American
Petroleum Institute (API) figures on Tuesday. Analysts expected
them to decline.
Brent crude futures were down $1.03, or 1.2%, to $81.85 a
barrel, while U.S. West Texas Intermediate crude (WTI) dropped
$1.25, or 1.6%, to $77.41 as of 0802 GMT.
"The view on the fundamental outlook remains grim," said Tamas
Varga of oil broker PVM, adding that "the timing of a Fed rate
cut is ambivalent at best".
Oil settled about 1% lower on Tuesday.
Physical crude markets have been weakening and in another sign
that concern of tight prompt supply is easing, the premium of
Brent's first-month contract over the second, known as
backwardation, is close to its lowest since January.
Fed policymakers said on Tuesday the U.S. central bank should
wait several more months to ensure that inflation really is back
on track towards its 2% target before cutting interest rates.
Higher borrowing costs can slow economic growth and pressure oil
demand.
Investors are awaiting minutes from the Fed's last policy
meeting and, following the API data, the latest official U.S.
oil inventory figures from the Energy Information Administration
(EIA) due later on Wednesday.
"The Federal Open Market Committee (FOMC) minutes will be
scrutinised for Fed's assessment of bumpy Q1 inflation and clues
on the timing and extent of potential interest rate cuts in
2024," ANZ analysts said in a report.
Inflation in Britain fell by less than expected in April and a
key core measure barely dropped, figures showed on Wednesday,
prompting investors to pull bets on a rate cut next month.
(Reporting by Alex Lawler, additional reporting by Sudarshan
Varadhan; Editing by Emelia Sithole-Matarise)
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