Oil Prices Hold Steady, Eyes on U.S. Consumer Price Data

Oil prices showed little movement on Tuesday following gains in the previous session, supported by expectations of increased summer fuel demand, while market focus turned to upcoming U.S. consumer price data.

As of 0640 GMT, Brent futures for August settlement edged down 5 cents to $85.96 a barrel, following a 0.9% rise on Monday. Meanwhile, U.S. crude futures were slightly lower by 3 cents at $81.60 a barrel after climbing 1.1% the day before. Both benchmarks had recorded gains of about 3% over the previous week, marking two consecutive weeks of increases.

The uptick in oil prices has been driven by rising gasoline demand and declining oil and fuel inventories in the U.S., the world’s largest oil consumer, entering its peak summer consumption period.

A preliminary Reuters poll indicated expectations of a 3 million barrel decline in U.S. crude oil stockpiles for the week ending June 21, with gasoline stocks also anticipated to have decreased, while distillate inventories likely rose.

Independent market analyst Tina Teng noted, „The surge in oil prices was triggered by an optimistic demand outlook and reduced U.S. inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months.“

However, concerns linger among investors about potential limitations on oil price gains due to high interest rates constraining economic growth and fuel consumption.

Market attention also remains on geopolitical tensions, including ongoing Ukrainian attacks on Russian oil infrastructure, which could disrupt crude and fuel supplies. Recent Ukrainian drone strikes targeted four refineries, including major producer Ilsky refinery in southern Russia.

Furthermore, the European Union’s adoption of sanctions against Russia over the Ukraine conflict, which includes restrictions on Russian state-owned shipping firm Sovcomflot and its vessels, adds to market uncertainty.

ANZ Research analysts highlighted, „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 U.S., Israel, and Saudi Arabia.“

Looking ahead, market participants are keenly awaiting the release of the U.S. personal consumption expenditures index on Friday, seen as pivotal in providing insights into future Federal Reserve policy decisions on interest rates.

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