WTI crude futures fell around 0.5% to below $87 per barrel, as expectations that Fed will tighten soon outweighed concerns about tight worldwide supply.
During its last meeting, the Fed signaled a rate hike in March as expected, while suggesting more frequent and larger interest rate increases could happen this year.
Chairman Powell also said that inflation could go even higher and there’s a risk it will not decline to pre-pandemic levels any time soon. Meanwhile, concerns over tight supply and energy disruptions if Russia invades Ukraine linger.
Also, recent threats to the United Arab Emirates from Yemen’s Houthi movement have added to jitters in the oil market. Still, OPEC+ is expected to ratify another modest production increase of 400,000 bpd next week although the cartel has been struggling to accomplish with the output rise.