Oil Prices Stall as Traders Await Key Economic Data and OPEC Report
Oil prices remained steady in Asian trade on Tuesday as traders exercised caution ahead of the release of key U.S. inflation data and the anticipated OPEC monthly report. After staging a recent rebound rally, the price of crude appeared to be losing momentum and remained rangebound for the second consecutive session.
Last week, oil prices soared following Israel’s rejection of a potential ceasefire with Hamas, which sparked increased tensions in the region. As Israel continued its offensive against the Palestinian group and Yemen’s Houthi group attacked vessels in the Red Sea, global oil supplies were affected. Crude shipments through the region were redirected and delayed, causing further impact on prices.
In Asian trade, futures expiring in April rose by 0.1% to $82.06 a barrel, while another benchmark rose by 0.1% to $76.89 a barrel, both nearing two-week highs. However, trading volumes were influenced by the week-long holiday in China.
Attention has now shifted to the forthcoming release of the U.S. Consumer Price Index (CPI) inflation data. The data, expected later on Tuesday, is predicted to reveal a slight easing in inflation for January, though it is expected to remain above the Federal Reserve’s annual target of 2%. The central bank has warned that persistent inflation could lead to higher interest rates, potentially impacting oil demand. The stronger dollar resulting from higher interest rates also makes crude more expensive for international buyers, putting pressure on prices. Uncertainty regarding future oil demand in Europe has been further fueled by projected decline in economic growth in the UK and the euro zone.
Additionally, the release of the OPEC report later on Tuesday is highly anticipated, as it is expected to provide further insights into the cartel’s demand expectations. During a recent meeting, OPEC decided to maintain its production levels and projected a significant improvement in oil demand over the next two years. This report will be followed by a document from the International Energy Agency, scheduled for release on Thursday.
Analyst comment
Positive – The oil prices remained stable, nearing two-week highs, despite the cautious market sentiment. The anticipation of key economic data and the OPEC report is influencing trading volumes. However, uncertainty surrounding future oil demand in Europe and potential higher interest rates are factors to watch out for. Analysts expect the OPEC report to provide insights into demand expectations.
