HOUSTON: Oil prices fell on Tuesday, after fresh US data indicated inflation remains sticky, while potential risks to supply from Mideast tensions and wildfires in Canada lent a floor to prices. Brent crude futures dropped 98 cents to $82.38 a barrel at 01:05 p.m. ET (1705 GMT), while US West Texas Intermediate crude futures (WTI) lost $1.07 to $78.05 a barrel.
US producer prices increased more than expected in April amid strong gains in the costs of services and goods, indicating that inflation remained elevated early in the second quarter.
Borrowing costs in the US have been stuck at high levels since last July as the government aims to quash sticky inflation. Federal Reserve Chair Jerome Powell said he expects US inflation to continue declining through 2024 but warned his confidence in those decreases has fallen after prices rose more quickly than expected through the first quarter.
US consumer price data, expected on Wednesday, will have a sharper impact on the timing of the much-awaited rate cut, which could spur economic growth and therefore oil demand.
Meanwhile on Tuesday, the Organization of the Petroleum Exporting Countries stuck to its forecast for relatively strong growth in global oil demand in 2024 and said there was a chance the world economy could do better than expected this year.
OPEC’s monthly report said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Energy markets were also watching wildfires in remote western Canada that could disrupt the country’s oil supply, and in turn buoy prices. Firefighters on Monday were racing to contain one blaze in British Columbia and two in Alberta near the heart of the country’s oil sands industry. Canada has a 3.3 million barrel per day (bpd) production capacity, and is a key supplier of heavier crude.
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