Oil prices experienced on Tuesday a slight increase as market participants remained cautious in anticipation of crucial U.S. inflation data that could influence interest rates. Additionally, attention was directed towards an upcoming monthly report from OPEC.
Read more: Oil prices slide as Chinese import data signals weakening demand
By 22:01 ET (02:01 GMT), Brent oil futures set to expire in May had risen by 0.3 percent to reach $82.43 per barrel, while West Texas Intermediate crude futures saw a 0.3 percent increase to reach $77.77 per barrel.
Recent sessions witnessed crude prices trading within a narrow range, with conflicting signals regarding demand and supply. Over the past three weeks, Brent and WTI futures have fluctuated between $85 and $75 per barrel.
Deteriorating demand in China
Concerns surrounding China played a significant role in oil markets, as demand in the world’s largest crude importer appeared to be deteriorating with limited prospects for immediate improvement. Beijing’s announcement of a modest growth target for 2024 and lack of clear indications regarding additional stimulus measures contributed to these concerns. However, expectations of enhanced U.S. crude demand mitigated some of the worries, as several refiners in the country resumed production after an extended break. It is worth noting that China’s crude production remained at record highs, exceeding 13 million barrels per day.
Market participants eagerly awaited the monthly report from the Organization of Petroleum Exporting Countries (OPEC) for further insights into demand, particularly after the cartel announced its intention to maintain the current pace of production cuts until the end of June. The International Energy Agency is also scheduled to release its monthly report later this week.
Importance of U.S. CPI data
Given the significance of the U.S. consumer price index data, oil markets approached the announcement with caution. The data, scheduled for release later on Tuesday, is expected to reveal that inflation remained elevated and well above the Federal Reserve’s annual target of 2 percent in February. Any indications of increasing inflation are likely to result in a more hawkish stance from the Fed, thereby prolonging higher U.S. interest rates. Last week, Fed Chair Jerome Powell highlighted that potential interest rate adjustments in 2024 would depend largely on the trajectory of inflation.
For more news on markets, click here.
