Oil prices declined after China revealed that its inflation accelerated to 5.4 percent in March, while economic growth slowed to 9.7 percent year on year in the first quarter, raising speculation that the government will go for yet another interest rate hike.
Oil futures have been under pressure from a Goldman Sachs (NYSE:GS) note, which came out earlier this week, advising the investment bank’s clients to exit long positions on several commodities, including oil, cotton and copper. Goldman said that oil prices could soon fall after unrest in the oil-rich Middle East-North Africa region drove the prices to two and a half year highs.
Today, Federal Reserve governor Elizabeth Duke said that the Fed will not take into account the soaring oil prices when making decisions on monetary policy amid speculation that the US central bank would have to raise rates in response to higher inflation.
The Fed seems to be likely to keep its US$600 billion stimulus policy unchanged.
US light, sweet crude for May delivery, which is currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), declined to US$107.70/barrel, while June crude edged lower to US$108.26/barrel.
May Brent crude last traded at US$121.86/barrel on the ICE Exchange.
BP (LON:BP) declined 1 percent, while fellow supermajor Royal Dutch Shell (LON:RDSB) rose marginally, as did Cairn Energy (LON:CNE), BG Group (LON:BG) and Tullow Oil (LON:TLW).
Salamander Energy (LON:SMDR) tumbled 10 percent. Fellow midcaps JKX Oil & Gas (LON:JKX) and Soco International (LON:SIA) fell 1 percent.