Oil prices moved little in Asian trade on Tuesday as traders turned cautious ahead of key U.S. inflation data that is expected to factor into the path of interest rates, while an OPEC monthly report was also in focus.
Prices were rangebound for a second straight session as a recent rebound rally in crude now appeared to be running out of steam. Oil prices had risen sharply last week after a potential Israel-Hamas ceasefire was rejected by Israel.
Israel kept up its offensive against the Palestinian group, while Yemen’s Houthi group continued to attack vessels in the Red Sea. The latter was the clearest sign of the Israel-Hamas war potentially impacting global oil supplies, as crude shipments through the region were redirected and delayed.
Brent oil futures expiring in April rose 0.1% to $82.06 a barrel, while West Texas Intermediate crude futures rose 0.1% to $76.89 a barrel by 20:58 ET (01:58 GMT). Both contracts were close to two-week highs, although trading volumes were held back by a week-long holiday in China.
CPI data, OPEC report set to provide more rate cut cues
Focus was now squarely on U.S. consumer price index (CPI) inflation data due later on Tuesday. The reading is expected to show that inflation eased further in January, but remained well above the Federal Reserve’s annual 2% target.
The central bank had recently warned that sticky inflation was likely to keep interest rates higher for longer, pointing to sustained pressure on the economy in the coming months- a trend that could potentially dent oil demand.
The prospect of high-interest rates also pushed up the dollar, which in turn pressured crude prices. A higher dollar dents oil demand by making crude more expensive for international buyers.
Inflation data from the UK and GDP data from the euro zone was also on tap later in the week, with the latter expected to show a sustained decline in the world’s third-largest economy. Slowing economic growth in Europe has also cast uncertainty over oil demand in the coming years.
A monthly report from the Organization of Petroleum Exporting Countries (OPEC) is due later on Tuesday, and is expected to provide more cues on the cartel’s expectations for demand.
The group had kept its production levels steady during a recent meeting and also said that it expected oil demand to improve substantially in the next two years.
After the OPEC report, a monthly report from the International Energy Agency is also due on Thursday.
Comments are closed.