Fuel prices have increased.

© Reuters Crude oil storage tanks are seen in an aerial photo at the Cushing Oil Facility in Cushing, Oklahoma, U.S., April 21, 2020. REUTERS/Drone Base

By Stephanie Kelly and Isabelle Cua

SINGAPORE (Reuters) – Oil prices rose in volatile trade on Tuesday, as winter-sparing investors worried about lower demand in China, the world’s biggest crude importer, and further hikes in U.S. and European interest rates.

U.S. crude was up 50 cents, or 0.5%, at $94.50 a barrel by 0644 GMT, while WTI crude was up 52 cents, or 0.6%, at $88.30 a barrel. Both contracts fell more than $1 earlier in the session.

The stress on hard goods continues to support prices.

In the United States, the Strategic Petroleum Reserve (SPR) fell 8.4 million barrels to 434.1 million barrels on September 9, 2010.

US President Joe Biden announced plans in March to release 1 million barrels per day from the SPR to tackle high US oil prices that have fueled inflation.

U.S. commercial oil inventories fell for a fifth straight week and are expected to have fallen by 200,000 barrels in the week to Sept. 9, an initial Reuters poll showed on Monday.

The American Petroleum Institute (API), an industry group, will release its inventory report on Tuesday at 4:30 pm EDT (2030 GMT). The US Energy Information Administration (EIA) will report on Wednesday at 10:30 am EDT (1430 GMT).

“We remain bullish on oil prices,” said energy analyst Ampreet Singh. Barclay (LON:), wrote a note.

The West’s hopes of reviving the nuclear deal with Iran have dimmed. Tehran Germany expressed regret for not responding positively to European proposals to renew the agreement reached in 2015. US Secretary of State Anthony Blinken said a deal was unlikely in the near future.

Tuesday’s gains in oil prices renewed fears of lower global oil demand as China, the world’s second-biggest oil consumer, continued to ease Covid-19 restrictions.

The number of trips taken during China’s three-day Mid-Autumn Festival holiday has dropped, and tourism revenue has also fallen as strict COVID-19 rules discourage people from traveling.

US consumer price index (CPI) data is set for release at 1230 GMT on Tuesday. Expectations are that core inflation may reach high levels, the European Central Bank and the Federal Reserve are prepared to increase interest rates further to combat inflation.

“If the US CPI comes in higher than expected, the chances of the Fed maintaining a strong rate hike will strengthen,” said Tina Teng, analyst at CMC Markets.

This compares the value of the US dollar to other international currencies, making the dollar more expensive for investors.

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