Investors are waiting for key US CPI data and the outcome of the Fed’s policy meeting for a clearer picture of where inflation is heading
11 June 2024 - 07:37
byTrixie Yap and Yuka Obayashi
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Tokyo/Singapore — Oil prices traded lower on Tuesday, as investors waited for key US inflation data and the outcome of the Federal Reserve’s policy meeting to glean a clearer picture of where inflation is heading, and how that will affect fuel demand.
Brent crude futures fell 11c, or 0.13%, to $81.52 a barrel by 4.33am GMT and US West Texas Intermediate (WTI) crude futures slipped 3c, or 0.04%, to $77.71.
Prices had climbed about 3% to a one-week high on Monday, buoyed by the expectation that the northern hemisphere summer vacation season will boost fuel demand this summer, a gain some analysts said was likely to be short-lived given the prospect of higher interest rates remained.
The release of US consumer price index data for May and the conclusion of the Fed’s two-day policy meeting are both scheduled for Wednesday.
“More conviction may be needed in oil prices for a more sustained recovery with a move above the $83.00 level, given that the broader trend for oil prices still leans on the downside with a series of higher highs since April,” IG market strategist Yeap Jun Rong said.
A decline in Saudi crude exports to China for a third consecutive month put further pressure on prices.
Higher refinery margins were helping to support oil prices, as was the potential that the US could boost crude purchases for its petroleum reserve, some analysts said.
Profit margins for a typical Singapore refinery that processes Dubai crude have averaged around $4 a barrel in the past three trading sessions, up from May average of $2.56 a barrel, LSEG pricing data showed.
The prospect that if WTI stayed below $79 the US would move to build up its strategic reserves provided oil price support, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
The US could hasten the rate of replenishing the strategic petroleum reserve as maintenance on the stockpile was completed by the end of the year, Energy Secretary Jennifer Granholm told Reuters last week. It wants to buy back oil at about $79 a barrel.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil loses ground in cautious trade
Investors are waiting for key US CPI data and the outcome of the Fed’s policy meeting for a clearer picture of where inflation is heading
Tokyo/Singapore — Oil prices traded lower on Tuesday, as investors waited for key US inflation data and the outcome of the Federal Reserve’s policy meeting to glean a clearer picture of where inflation is heading, and how that will affect fuel demand.
Brent crude futures fell 11c, or 0.13%, to $81.52 a barrel by 4.33am GMT and US West Texas Intermediate (WTI) crude futures slipped 3c, or 0.04%, to $77.71.
Prices had climbed about 3% to a one-week high on Monday, buoyed by the expectation that the northern hemisphere summer vacation season will boost fuel demand this summer, a gain some analysts said was likely to be short-lived given the prospect of higher interest rates remained.
The release of US consumer price index data for May and the conclusion of the Fed’s two-day policy meeting are both scheduled for Wednesday.
“More conviction may be needed in oil prices for a more sustained recovery with a move above the $83.00 level, given that the broader trend for oil prices still leans on the downside with a series of higher highs since April,” IG market strategist Yeap Jun Rong said.
A decline in Saudi crude exports to China for a third consecutive month put further pressure on prices.
Higher refinery margins were helping to support oil prices, as was the potential that the US could boost crude purchases for its petroleum reserve, some analysts said.
Profit margins for a typical Singapore refinery that processes Dubai crude have averaged around $4 a barrel in the past three trading sessions, up from May average of $2.56 a barrel, LSEG pricing data showed.
The prospect that if WTI stayed below $79 the US would move to build up its strategic reserves provided oil price support, said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
The US could hasten the rate of replenishing the strategic petroleum reserve as maintenance on the stockpile was completed by the end of the year, Energy Secretary Jennifer Granholm told Reuters last week. It wants to buy back oil at about $79 a barrel.
Reuters
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