Oil prices rallied on Tuesday as the US dollar eased against its leading peers, but downside economic data from major oil-importing economies such as China, coupled with concerns about slowing global fuel demand growth, capped gains.
Brent crude futures rose 27 cents to $93.53 a barrel as of 0415 GMT, after falling 0.3% in the previous session. West Texas Intermediate (WTI) crude futures for December delivery rose 36 cents to $84.94 a barrel, after the previous 0.6% decline.
The US dollar index fell in early trade, making dollar-denominated oil cheaper for other currency holders and helping prices rise.
However, uncertain signs of economic activity in the world’s two largest oil consumers, the United States and China, limited the increase.
Supply and demand fundamentals have remained largely stable, and economic sentiment continues to play a role in the oil market. Most of the negative outlook on demand has already been priced in, so downside pressures are not expected to have much impact.
US business activity contracted for the fourth month in October. A Monday survey of manufacturers and service firms showed that customer demand was falling.
This weakening may show that the Federal Reserve’s rate hikes to combat inflation are working and may persuade the Fed to slow down its rate-raising policies, a positive signal for fuel demand.
Also Monday, government data showed China’s crude oil imports in September were 2% lower than a year ago, reporting slowing retail sales while also maintaining the low import trend.
US crude inventories are also expected to rise this week, which could limit price increases. It is estimated that, on average, crude oil inventories increased by 200,000 barrels in the week to October 21.
Analysts estimate gasoline stocks fell by about 1.2 million barrels, and distillate stocks, which include diesel and heating oil, fell 1.1 million barrels last week.
The tightening of worldwide liquefied natural gas (LNG) markets and major oil producers cutting supply has plunged the world into “the first truly global energy crisis”, the International Energy Agency (IEA) chief Birol said on Tuesday.