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Oil prices remained largely unchanged on Tuesday, following a rise in the previous session. Investors are cautiously awaiting the release of U.S. consumer price data, which could influence interest rate decisions and subsequently impact oil demand. However, expectations of increased consumption during the peak summer driving season in the U.S. are providing some support to the market.
As of 0440 GMT, Brent futures for August settlement inched up 5 cents to $86.06 a barrel, while U.S. crude futures for August delivery increased by 6 cents to $81.69 a barrel. Both benchmarks had seen a 3% rise last week, marking two consecutive weeks of gains.
The rise in gasoline demand and decline in oil and fuel stockpiles in the U.S. have contributed to a more optimistic outlook for crude. Preliminary data suggests a significant drop in U.S. crude oil stockpiles for the week ending June 21, further bolstering the market sentiment.
However, concerns about the impact of relatively higher interest rates on economic growth and fuel consumption are keeping investors cautious. The upcoming release of the personal consumption expenditures index, the Federal Reserve’s preferred inflation gauge, on Friday, will provide further clarity on the interest rate outlook.
Meanwhile, ongoing geopolitical tensions, particularly Ukrainian attacks on Russian oil infrastructure, are also supporting oil prices. These attacks have the potential to disrupt crude and fuel supply, adding to the existing uncertainties in the market.
The European Union’s recent adoption of sanctions against Russia, including the addition of 27 vessels to its list of sanctioned entities, further complicates the situation. These sanctions could further impact oil supply and prices in the coming days.
Overall, the oil market is currently navigating a delicate balance between rising demand expectations and concerns about economic growth and geopolitical tensions. The upcoming U.S. consumer price data and further developments in the Russia-Ukraine conflict will be key factors influencing the future direction of oil prices.
