Oil prices dip as markets await US inflation data

London — Oil prices fell on Tuesday, relinquishing some of the strong gains of the previous two sessions with the market cautious ahead of US inflation figures, which will be crucial to the Federal Reserve’s next interest rate decision.

The Brent crude price was down 68c, or 0.9%, at $76.33 a barrel and US West Texas Intermediate (WTI) crude fell 69c, or 0.9%, to trade at $72.47 by 10.22am GMT.

Both contracts had settled more than 2% higher in the previous trading session.

“The market is cautious today ahead of the inflation data ... With net long positions declining sharply over the last two weeks, a lot of traders are already out of the market, so volumes are low,” said Suvro Sarkar, lead energy analyst at DBS Bank.

US consumer price index (CPI) figures for April are due on Wednesday.

The Fed raised rates last week in what may be the last hike of its tightening cycle. It dropped guidance about the need for future hikes, with inflationary pressure starting to ease.

US consumers said last month they expected slightly lower inflation in a year’s time, a report from the New York Federal Reserve showed on Monday.

“Continued moderation of US inflation, and elsewhere, is of course expected,” Clifford Bennett, chief economist at ACY Securities, said.

“Nevertheless, the Federal Reserve remains highly focused on defeating sustained high inflation at any level,” he added.

While oil markets fell sharply last week, prices rose on Friday and Monday as fears of recession eased in the US, the world’s biggest oil consumer, and some traders saw crude’s three-week slide on demand worries as overdone.

Also supporting prices, the Canadian province of Alberta declared a state of emergency over the weekend in response to wildfires that have displaced nearly 30,000 people and prompted energy producers to shut in at least 280,000 barrels of oil equivalent per day, more than 3% of Canada’s output. 

Reuters