WASHINGTON (dpa-AFX) - Oil futures pared early gains and drifted lower on Tuesday on reports of a likely proposal to impose a federal surtax on certain oil companies to curb rising inflation.
A sharp drop in natural gas prices amid reports that repairs to a damaged Freeport LNG terminal might not be on till later this year, weighed as well on oil prices.
A stronger dollar too contributed to the drop in oil prices. The dollar index surged to 105.43 with traders betting on sharper interest rate cuts from the Federal Reserve. The Fed is widely expected to raise interest rate by 50 or 75 basis points on Wednesday.
West Texas Intermediate Crude oil futures for July ended lower by $2.00 or about 1.7% at $118.93 a barrel, after having climbed to $123.66 a barrel earlier in the session.
Brent crude futures were down $2.22 or 1.81% at $120.03 a barrel a little while ago. Brent crude futures had climbed to $125.16 a barrel earlier in the day.
Oil prices climbed higher earlier in the day as tight supply outweighed concerns about energy demand. A report from OPEC+ that it produced a total of 28.5 million barrels per day in May, which was down by about 176,000 barrels per day compared to the previous month, contributed a bit to the rise in oil prices.
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