Oil prices fall as Fed Chair Jerome Powell says US could face more inflation surprises

Crude oil prices continue to decline after the Fed Chair Powell on Wednesday said that the US faces an "uncertain" global environment and could see further inflation "surprises". This has not augured well for the industrial commodities. So whether it's crude or metal, the decline is seen getting extended for both of these sectors.

US West Texas Intermediate (WTI) crude futures fell $2.39, or 2.3 percent, to $ 103.80 a barrel by 0031 GMT. Brent crude futures dropped $ 2.24, or 2.0 percent, to USD 109.50 a barrel.

Both benchmarks tumbled around 3 percent on Wednesday to hit their lowest levels since mid-May.

The US President did call for three months suspension of the federal gas tax and also the diesel tax. This would cost $10 billion approximately to the budget. This is exactly what the US opposition parties have expressed resistance to. So this may or may not go through.

However, the US President will be meeting seven major oil companies in the US to discuss increasing production capacity. There is also a conversation that the US exports could be partially restricted and there is so much happening in the US right now which is keeping the oil markets on the edge, but the decline suggests that the US and the European Union hedge funds are selling position ahead of the June quarter-end and that is continuing to weigh on beyond to the markets.

The expectation is that from here as well another 3-5 percent decline in crude prices could be seen before this month-end.

(with inputs from Reuters)