Oil prices edged higher on Tuesday as traders anticipated increased demand during the upcoming summer season. Concerns over potential supply disruptions in Russia and the Middle East also helped keep crude prices well-supported.
Prices hover near recent highs, but gains limited
Prices hovered near their highest levels since early May. However, further gains were constrained by a relatively strong US dollar and anticipation of additional signals regarding US interest rate policy.
Brent, WTI futures see modest increases
Brent crude oil futures for August delivery rose 0.1 percent to $86.07 per barrel, while West Texas Intermediate crude futures increased 0.1 percent to $81.72 per barrel as of 20:51 ET (00:51 GMT).
Traders bet on summer demand surge
Oil prices have advanced in recent sessions, underpinned by expectations that fuel demand will improve as travel activity picks up pace during the summer months. This notion was bolstered by recent data showing an unexpected drawdown in U.S. inventories, with gasoline stockpiles declining.
Demand recovery outlook remains uncertain
However, the extent of demand recovery in the coming months remains uncertain, especially as the U.S. economy grapples with elevated interest rates and stubborn inflation. This dynamic has supported the U.S. dollar, which in turn has limited gains in oil prices.
Read more: Oil prices dip as dollar rises, investors await key inflation data
Focus shifts to key U.S. inflation data
The focus this week will be on the key PCE price index data, which is the Federal Reserve‘s preferred inflation gauge, for further clues on the world’s largest fuel consumer.
Weakening demand seen in Europe, China
Outside the US, deteriorating economic conditions in Europe point to waning demand in the region. Doubts over a recovery in China’s economy also lingered, as traders awaited additional stimulus measures from the world’s biggest oil importer.
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