Oil prices saw limited movement in Asian trading on Tuesday as investors awaited supply and demand forecasts from an upcoming OPEC report. Despite the anticipation, optimism surrounding recent supply cuts by major producers Saudi Arabia and Russia kept oil prices close to their 10-month highs.
Investors were also on edge ahead of key U.S. inflation data scheduled for release this week. The outcome of this data is expected to set the tone for the upcoming Federal Reserve meeting. The dollar has surged to nearly a six-month high in anticipation of the inflation reading.
Over the past week, oil prices have recorded strong gains, primarily driven by more significant-than-expected supply cuts. Saudi Arabia and Russia’s efforts to reduce supply have alleviated concerns about worsening global economic conditions that could potentially impact demand.
Brent oil futures remained relatively stable at $90.65 per barrel, while West Texas Intermediate crude futures held steady at $87.33 per barrel as of 21:09 ET (01:09 GMT).
OPEC Report in Focus
The focal point for oil markets is the monthly report from the Organization of Petroleum Exporting Countries (OPEC), set to be released later in the day. Market participants are keen to gain insights into supply dynamics, particularly given the recent cuts by Saudi Arabia and Russia. Any indications regarding demand will also be closely monitored, especially as concerns grow that rising inflation might lead to more interest rate hikes by major central banks.
Forecasts for China’s oil demand will also be scrutinized. Although China’s oil imports have remained robust this year, concerns have arisen due to cooling economic activity in the country. Recent economic data, however, has shown some improvement in China, particularly in inflation and lending activity, thanks to ongoing government monetary support.
In addition to the OPEC report, the International Energy Agency (IEA) is scheduled to release its monthly report on Wednesday.
Dollar Strength Ahead of CPI Data
Despite experiencing some losses during the week, the U.S. dollar remained close to its six-month highs, as markets maintained concerns about a potential resurgence in U.S. inflation. Wednesday’s data is expected to reveal that the consumer price index (CPI) grew at a faster pace in August compared to July, driven by strong consumer spending and increased fuel costs.
Rising inflation could lead to a more hawkish outlook from the Federal Reserve, potentially resulting in further interest rate hikes by the central bank in the coming months. A stronger dollar also has an impact on crude demand, as it makes oil more expensive for international buyers.
