Oil prices retreated for a second straight session as the demand outlook was weighed by Asia's coronavirus lockdowns and growing recession risks, while a strong dollar made crude more expensive for buyers using other currencies. Soaring U.S. inflation has fueled fears that the Federal Reserve will act aggressively and tip the economy into recession. The dollar rose on fears of tighter monetary policy, making dollar-denominated commodities less attractive.

New York Fed President John Williams said the U.S. central bank's attempt to curb high inflation while achieving a soft landing for the economy could lead to higher unemployment. Cleveland Fed President Loretta Mester supports a 50-basis-point rate hike at its June and July meetings, and many analysts expect the dollar to maintain its upward trend in the long-term.

John Kilduff, partner at Again Capital LLC, said: “These are turbulent times, and the daily price action is outrageous. The continued hesitation of EU countries to embargo Russian oil is also largely causing consideration in both directions. changes," the European Commission delayed action on the proposal. Member states need to unanimously agree to ban oil imports from Russia, although a French minister said a deal could be reached this week, with Hungary insisting against the embargo.

On the supply side, EIA lowered its forecast for U.S. crude oil production in 2022. U.S. crude oil production is expected to rise by 720,000 bpd in 2022 to 11.91 million bpd, the EIA said, from an earlier forecast of about 12 million bpd. U.S. crude, distillate and gasoline inventories are all expected to fall last week, preliminary surveys showed. But the API data showed that crude oil inventories fell, while distillate and gasoline inventories both edged up.

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