Oil prices steadied on Tuesday, recovering from the more than three-month lows reached over the past two days. Traders remained focused on the upcoming release of major inflation readings this week.
Crude oil benefited from lower trading volumes on Monday, as markets in the U.K. and U.S. were closed for public holidays. There was also some bargain-hunting after prices sank to their lowest levels since early February last week.
Brent crude oil futures expiring in July edged 0.1 percent lower to $83.04 per barrel, while West Texas Intermediate crude held steady at $78.64 per barrel as of 00:49 GMT.
Investors await inflation data for rate clues
The key economic data points this week will be the U.S. personal consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred inflation gauge. It is expected to show some cooling in inflation on Friday, though the reading is still likely to remain well above the Fed’s 2 percent annual target.
This will be crucial in determining the path of future interest rate hikes by the U.S. Central Bank. Several Fed officials have warned that stubborn inflation will prevent them from loosening monetary policy anytime soon, which has weighed on oil prices.
Higher interest rates are expected to stifle economic activity, in turn dampening oil demand. Inflation numbers from the Eurozone, Australia and Japan will also be closely watched for their implications on monetary policy.
Markets are also pricing in a potential interest rate cut by the European Central Bank next week.
OPEC+ meeting in focus for supply signals
Traders are also awaiting the OPEC+ meeting scheduled for June 2. The focus will be on whether the producer group extends its current 2.2 million barrels per day in production cuts beyond the June 30 deadline.
OPEC+ had implemented these supply curbs over the past year to support oil prices, though the impact has been fleeting as concerns over weak demand have persisted.
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