NEW YORK: Oil prices rose more than 1% on Tuesday with support from a weaker dollar and hopes that the Federal Reserve might ease up on its policy tightening after a key U.S. inflation report this week, though concerns remain over Chinese demand.
Brent crude futures rose 91 cents, or 1.1%, to $85.09 a barrel by 11:17 a.m. EDT. U.S. West Texas Intermediate futures rose $1.29, or 1.6%, to $81.03 a barrel.
The dollar weakened on hopes that the U.S. Federal Reserve is getting closer to ending its cycle of interest rate hikes, making dollar-priced oil cheaper for buyers holding other currencies.
“That break in the dollar - which was a headwind for oil yesterday - it’s a tailwind today,” Price Futures Group analyst Phil Flynn said.
A U.S. inflation report to be released on Wednesday is expected to help investors gauge the near-term trajectory for interest rates.
Oil edges higher as tighter supply looms, growth concerns weigh
“The short-term crude demand outlook will soon be clearer. This week we will find out if the U.S. economy is taking steps into the recession pool or if it is going to do a cannon ball into it,” said Edward Moya, senior analyst at OANDA.
Data from China, however, showed consumer inflation in March rose at its slowest pace since September 2021, suggesting demand weakness persists in an uneven economic recovery.
“China’s March CPI is lower than expected, which may promote the Chinese government to further stimulate the economy,” said Tina Teng, an analyst at CMC Markets.
Oil futures have climbed around 7% since the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia surprised the market last week with further cuts to production targets from May.
In France, the restart of the last of the four domestic refineries shuttered by a month-long strike signaled a likely boost to demand for oil.
On the U.S. supply front, industry data on U.S. crude stockpiles is due on Tuesday. The average estimate from five analysts polled by Reuters was that crude inventories fell by about 1.3 million barrels in the week to April 7.