Oil futures: Brent retreats from $70/b amid inflation fears

London (Quantum Commodity Intelligence) – Crude oil futures hit a three-month high Tuesday, including Brent futures breaching the $70 per barrel mark, before easily giving up the day's gains as sentiment flipped back to the sell side.

Having reached a high of $70.24/b earlier in the session, Brent futures for front-month July were later trading at $69.07/b (1445 GMT), compared to Monday's settle of $69.46/b, a fall of 0.56%.

Likewise, WTI traded at a high of $67.29/b but by late morning in New York June WTI was trading $65.85/b, down 0.6% from Monday's settle of $66.27/b.

Optimism over the US and European post-lockdowns recovery had initially outweighed ongoing concerns over increasing COVID-19 restrictions in Asia.

But a sharp drop in US housing starts of 9.5% year-on-year triggered the initial price drop, as sentiment over the strength of the US economy quickly waned amid inflation will cool energy demand.

Brent had previously traded above $70/b on February 8, reaching a post-pandemic high of $71.38/b before retreating sharply on the day.

Brent came within touching distance of $70/b on two previous occasions during May, but faltered at the final push.

On Monday, the easing of lockdown restrictions in the UK boosted market sentiment, while figures showed a firm uptrend in US air passenger figures.

On the downside, inflationary concerns, tumbling demand from India and US/Iran talks that could see an increase in Iranian exports are seen keeping a lid on prices.