Oil prices experienced a slight increase on Tuesday, rebounding from a decline in the previous session. The rise was driven by ongoing evaluations of geopolitical concerns in the Middle East by investors.
During the early morning hours at 03:08 GMT, global benchmark Brent crude oil futures rose by 27 cents, reaching $87.27 per barrel. Similarly, U.S. West Texas Intermediate crude futures also saw an increase of 26 cents, reaching $82.16 per barrel.
Both benchmarks had decreased by 29 cents in the previous session due to indications that recent tensions in the Middle East had a limited immediate impact on oil supplies from the region.
According to Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet, the decline in crude oil prices can be attributed to the reduction of geopolitical risk premium, as the disruption to the oil supply was not significant. However, Sachdeva emphasized that the evolving geopolitical landscape still plays a crucial role in determining crude oil prices.
ANZ analysts expressed similar sentiments, stating that the current geopolitical situation remains highly precarious, and the market can expect continued volatility until more clarity emerges.
Anticipation of economic data releases
Investors are eagerly awaiting the release of the U.S. gross domestic product figures and the March personal consumption expenditure data, which is the preferred inflation gauge of the Federal Reserve (Fed). These upcoming data points will help assess the future trajectory of monetary policy.
Based on a preliminary Reuters poll of analysts, it is expected that U.S. crude oil inventories increased last week, while stockpiles of refined products likely experienced a decline.
Sachdeva highlighted that persistent U.S. inflation figures, hawkish statements from key Fed officials, and rising U.S. inventories are all factors constraining the growth of crude oil prices.
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