Oil prices dropped to $82 a barrel today, extending sharp falls triggered by concerns over rising US inflation while OPEC cut its 2021 oil demand forecast due to high energy prices.
Brent crude futures lost 52 cents, or 0.63%, to $82.12 a barrel this afternoon after rising to $83.37 in morning trade.
US West Texas Intermediate (WTI) futures were down 83 cents, or 1%, at $80.51.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report it expects oil demand to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month's forecast.
The group however stuck to its prediction of robust growth to above pre-pandemic rates in 2022.
Data yesterday showed US inflation increased by 6.2%, the fastest rate in 30 years, driven largely by higher energy prices, pushing the dollar higher and sending Brent and WTI crude down by 2.5% and 3.3% respectively.
A rise in US oil stocks after a government release of some strategic reserves put further pressure on prices.
In response to the rising inflation, US President Joe Biden said he asked the National Economic Council to work to reduce energy costs and the Federal Trade Commission to push back on market manipulation in the energy sector to reverse inflation.
"Crude prices are trying to find their footing after yesterday's slide as runaway inflation in America is adding pressure on the Biden administration to tap the Strategic Petroleum Reserve (SPR)," said Edward Moya, senior analyst at OANDA.
"Energy traders know that an SPR release will only deliver a very short-term drop in prices that won't provide much relief for the American consumer," he added.
The Brent crude price has gained more than 60% this year and hit a three-year high of $86.70 on October 25, supported by recovering demand and supply restraint by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+.