LONDON: Oil prices edged lower on Tuesday, after US data suggested inflation remains sticky, while OPEC maintained its demand forecast for the year.
Brent crude futures fell 55 cents to $82.81 a barrel at 1339 GMT, while US West Texas Intermediate (WTI) crude futures lost 67 cents to $78.45 a barrel.
On Tuesday, 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 United States have been stuck at high levels since last July in an effort to curb sticky inflation. Still, 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.
Oil prices rise as attention shifts to US inflation
“Oil prices were slightly higher overnight but remain in a broad holding pattern over the past week, with the lead-up to the upcoming US inflation data keeping some reservations in place,” said Yeap Jun Rong, market strategist at IG.
Meanwhile, earlier on Tuesday, OPEC - 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.
The OPEC 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.
Eyes are also on wildfires in remote western Canada that could disrupt the country’s oil supply.
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.
“Spreading wildfires in Alberta oil sands impose downside risks to our constructive Canada production outlook as massive fires in the same region eight years ago triggered a temporary shutdown of over 1 million bpd oil production,” said Goldman Sachs analysts in a note.
Although no operational disruptions have been reported, Alex Hodes, an analyst at energy brokerage StoneX, said Canada’s 3.3 million barrel per day (bpd) production capacity was “very likely to be affected”.