Oil prices plunge into close, roiled by inflation fears
Oil prices slumped on Thursday, hit by a surge in the dollar after U.S. President Joe Biden said his administration was looking for ways to reduce energy costs amid a broader surge in inflation.
Brent and U.S. crude futures dropped sharply at the end of the session as traders sold out of riskier assets, including stocks and commodities, driven by expectations that central bankers will take steps to curb rising prices.
Brent crude futures settled down $2.14, or 2.5%, to $82.64 a barrel. That contract hit a high of $85.50 on the session before retreating.
U.S. crude settled down $2.81, or 3.3%, to $81.34 after reaching a high of $84.97 a barrel, just off seven-year highs touched in the last few weeks.
Inflation is heating up as the economic drag from the summer wave of COVID-19 infections fades and supply bottlenecks persist. The Federal Reserve is expected to try to stave the ongoing increase in prices, which has lasted longer than originally anticipated.
Separately, U.S. crude inventories rose by 1 million barrels in the most recent week, short of estimates for a 2.1 million build in crude stocks.
Several traders said on Thursday that prices could continue to rise in coming months, but noted as well that an ongoing rally could spur more shale industry production that would offset demand.
OPEC+, as the wider exporting group is called, rebuffed calls by the White House to boost production. U.S. output was most recently at 11.5 million barrels per day, still short of the near-13 million bpd reached in late 2019.
Reference: Reuters
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