Oil prices in Asian trade on Tuesday were calm, supported by hopes that a strong economic recovery in China will boost fuel demand and ease concerns that further US rate hikes could potentially hurt demand in the world’s largest economy.
Brent crude futures for April delivery, which expires Tuesday, rose 14 cents to $82.59 a barrel at 0443 GMT. The more active May contract rose 17 cents to $82.21 a barrel.
West Texas Intermediate (WTI) crude futures rose 21 cents to $75.89 a barrel.
Brent and WTI futures are on their monthly loss path of around 2.2% and 3.8% respectively and WTI is likely to catch a four-month of decline series.
Expectations of demand recovery in China supported gains as the market awaited key data over the next two days. Economists expect factory activity in the world’s second-largest economy to grow in February.
China’s economic recovery will increase demand for the commodity, and of the commodities, the oil will be positioned to benefit the most.
JPMorgan’s oil analysts maintained their 2023 average price forecast for Brent crude futures at $90 per barrel.
Services inflation remained high in the US. The threat of further rate hikes has capped gains after stronger-than-expected new orders for core capital goods manufactured in the US in January. Stronger-than-expected inflation figures and concerns about higher interest rates dampen demand.
The market will be waiting for the latest US oil inventories data from the American Petroleum Institute (API) industry group on Tuesday and the government’s Energy Information Administration (EIA) on Wednesday for more indications of demand.
A preliminary survey showed analysts expect crude oil inventories to rise by 400,000 barrels per week through February 24, the tenth week in a row.
All seven analysts surveyed estimate gasoline inventories have increased by about 700,000 barrels. Stocks of distillate, which includes diesel and heating fuel, were expected to decrease by about 500,000 barrels last week.