Oil prices posted slight gains on Tuesday in Asia as caution enveloped markets in anticipation of the US consumer price index (CPI) data and the Organization of Petroleum Exporting Countries’ (OPEC) monthly report, both due later in the day.
April contract Brent crude oil futures climbed 0.07% to $82.06 per barrel, while March contract US West Texas Intermediate (WTI) crude futures added 0.14% to $77.03 per barrel.
The two benchmarks traded near two-week highs, but volumes were curbed due to China’s week-long Lunar New Year holiday.
Crude prices were rangebound for the second consecutive session as oil’s recent sharp rise seemed to have started easing. Prices rallied in the previous after a proposed ceasefire deal between Israel and Hamas fell apart following a rebuff from Israeli Prime Minister Benjamin Netanyahu.
Israel continued its attack against the Palestinian militant group while the Iran-backed Houthi rebels carried on with their assaults in the Red Sea.
The move from the Yemeni group was an apparent indication of the Israel-Hamas conflict possibly disrupting supplies worldwide, as transporting oil cargo through the region took longer after being rerouted in an attempt to avoid the crisis in the vital sea trade pathway.
US CPI Data, OPEC Monthly Report In Focus
Traders are now focused on the US’s upcoming CPI inflation reading for January, which is expected to affect the Federal Reserve’s course on interest rates.
The data is expected to present a further decrease in inflation at 2.9% last month, staying above the Fed’s annual target of 2%.
The central bank recently said a sticky inflation may extend the period for higher interest rates, signaling continued pressure on the world’s largest economy in the coming months, which might weaken crude demand.
The potential of higher interest rates also supported the US dollar, thereby weighing on oil prices. A higher greenback pressures the demand for crude by increasing its price for overseas buyers.
In addition, the UK’s inflation data and the eurozone’s gross domestic product (GDP) figures will be published later this week. GDP data from the region is seen remaining down. Europe’s sluggish expansion has added to doubts about oil demand in the coming years.
Traders also anticipate further cues on the OPEC’s demand outlook with the release of its monthly report later Tuesday.
OPEC and its allies, including Russia, have held output levels in their recent meeting and stated that they expect a significant surge in crude demand in the next two years.
The report from the group will be followed by a monthly report from the International Energy Agency (IEA) on Thursday.