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SINGAPORE: Oil prices were little changed on Tuesday after rising in the previous session helped by expectations of increased fuel demand this summer, but investors were cautious ahead of US consumer price data, according to Reuters.
Brent futures for August settlement eased 5 cents to $85.96 a barrel as of 8:40 a.m. Saudi time after gaining 0.9 percent on Monday, while US crude futures were down 3 cents at $81.60 a barrel after climbing 1.1 percent a day earlier.
Both benchmarks rose about 3 percent last week, marking two straight weeks of gains.
Gasoline demand is rising and oil and fuel stockpiles have declined as the US, the world’s biggest oil consumer, enters the peak summer consumption period.
US crude oil stockpiles are expected to have fallen by 3 million barrels in the week to June 21, a preliminary Reuters poll showed on Monday. Gasoline stocks were also expected to have declined, while distillate inventories likely rose last week.
“The surge in oil prices was triggered by an optimistic demand outlook and reduced US inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months,” said independent market analyst Tina Teng.
Still, investors are cautious about the potential for further oil price increases on concerns that high interest rates will limit growth in fuel consumption by curtailing the economy.
The release of the personal consumption expenditures index, the Fed’s preferred measure of price gains, on Friday is expected to provide more clues to the outlook for rates. Delays to an interest rate cut would keep the cost of borrowing higher for longer.
Oil was also supported by continued Ukrainian attacks on Russian oil infrastructure that could cut crude and fuel supply. On June 21, Ukrainian drones hit four refineries, including the Ilsky refinery, one of the main fuel producers in southern Russia.
The EU adopted a package of sanctions against Russia over its war in Ukraine that will see 27 vessels, including ones run by Russian state-owned shipping firm Sovcomflot, added to its list of sanctioned entities.
“Adding to this, the market remains on edge ahead of elections in Iran later this week. A more hard-line president could result in more direct confrontations with the US, Israel and Saudi Arabia,” ANZ Research analysts said in a note.