HOUSTON: Oil prices rose by more than $1 per barrel in muted trade owing to public holidays in Britain and the United States after a downbeat week characterised by the outlook for U.S. interest rates in the face of sticky inflation.
The Brent crude July contract was up 99 cents at $83.11 a barrel by 12:10 p.m. ET (1610 GMT). The more active August contract rose $1.08 to $82.92.
U.S. West Texas Intermediate (WTI) crude futures were up $1.06 at $78.77.
Brent lost about 2% last week and WTI nearly 3% after Federal Reserve minutes showed some officials would be willing to raise interest rates further if it were deemed necessary to control stubbornly high inflation.
Oil prices drop as interest rate policy spurs fuel demand worries
“Sentiment in the oil complex … has been skittish as investors are constantly recalibrating expectations for the Federal Reserve’s monetary policy trajectory,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Recent data emanating from Western economies has shifted rate cut expectations depending on geography.
On Monday, key European Central Bank (ECB) policymakers said the bank has room to cut interest rates as inflation slows but must take its time in easing policy.
Figures for inflation in the euro zone are due on Friday and economists believe an expected tick up to 2.5% should not stop the ECB from easing policy next week.
The U.S. personal consumption expenditures index expected this week will be in the spotlight for further signals about interest rate policy. The index, due to be released on May 31, is viewed as the U.S. Federal Reserve’s preferred measure of inflation.
German inflation data on Wednesday and euro zone readings on Friday will also be watched for signs of a European rate cut that traders have pencilled in for next week.
Eyes will also be trained on the coming meeting of the OPEC+ group of oil producers comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The meeting is to take place online on June 2.
An extension to output cuts of 2.2 million barrels per day is the likely outcome, OPEC+ sources have said this month.
Goldman Sachs raised its global oil demand forecast for 2030 on Monday and expects consumption to peak by 2034 on a potential slowdown in electric vehicle adoption, keeping refineries running at higher-than-average rates till the end of this decade.