Oil extends losses near US$119 as global market selloff deepens

Oil extended losses for a third session as investors weighed the prospect of further monetary tightening to combat surging US inflation and the potential for more virus lockdowns in China.

West Texas Intermediate futures fell about 2 per cent to trade near US$119 a barrel amid a broader market selloff. US inflation accelerated to a fresh 40-year high last month and traders are now betting the Federal Reserve will raise rates by three quarters of a percentage point at least once in its next three meetings. China is starting to re-impose virus curbs as cases rise, just weeks after major easing in key cities such as Shanghai.

Oil is still up almost 60 per cent this year as rebounding economic demand coincided with a tightening market following Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of everything from food to fuels and some analysts are calling it the most bullish market they’ve ever seen. For now though, those drivers are taking a back seat as traders anticipate a sharp hiking of interest rates by the Federal Reserve.