NEW YORK: Oil prices rose slightly on Tuesday as the market weighed bearish U.S. economic data against OPEC’s demand growth forecast and persistent geopolitical tensions.
Brent futures for May delivery rose by 21 cents to $82.42 a barrel at 11:50 a.m. EDT (1550 GMT). The April U.S. West Texas Intermediate (WTI) crude contract rose 31 cents to $78.24.
U.S. consumer prices increased solidly in February amid higher costs for gasoline and shelter, the Labor Department’s Bureau of Labor Statistics said on Tuesday, a sign of persistent inflation.
Oil prices slips amid concerns over Middle East, China demand
“This does show a second month of an increase,” said Tim Snyder, an economist at Matador Economics, noting that the numbers were still within expectations. “Consensus in the markets says the Fed will not move to lower rates until June,” he added.
On Tuesday, OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024 and 2025, and further raised its economic growth forecast for this year saying there was more room for improvement.
The monthly report from the U.S. Energy Information Administration (EIA) is expected later on Tuesday, while the International Energy Agency (IEA), which advises industrialised nations, is anticipated to put out its estimates on Thursday.
Last week, economic data from China, the world’s biggest oil buyer, suggested softening demand even as crude imports increased in the first two months of the year compared with the same period in 2023.
“Bearish demand sentiment and growing non-OPEC supply leave little room for the market to be bullish on oil prices at this time,” said Serena Huang, head of APAC analysis at Vortexa.
Geopolitical tensions
Hopes of a ceasefire in Israel’s war against Hamas have faded, with negotiations deadlocked in Cairo while the conflict threatens to widen as Israel and Lebanon’s Hezbollah continue to exchange fire.
Though the Gaza conflict has not led to significant oil supply disruptions, Yemen’s Iran-aligned Houthis have been attacking ships in the Red Sea and Gulf of Aden since November in a campaign they say is in solidarity with Palestinians.
Airstrikes attributed to a U.S.-British coalition hit port cities and small towns in western Yemen on Monday and the Houthis said on Tuesday that they had fired missiles at what they described as a U.S. ship in the Red Sea.
Traders are becoming inured to such attacks, said John Evans at oil broker PVM.
“The inventory of oil that might be affected is not lost, it is just delayed - and with the new shipping times being part of the new norm, ‘delayed’ will eventually not be applicable,” he said.
In Russia, the world’s second-largest oil exporter, a Ukrainian attack on energy facilities set ablaze Lukoil’s NORSI refinery.
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