The Brent oil benchmark began slightly lower on Tuesday as the US dollar gained and traders awaited clues from the US Federal Reserve meeting minutes, after prices rose on Monday due to optimism about demand despite tighter supply.
On Tuesday, Brent crude was down 59 cents, or 0.5%, to $83.57 a barrel. The price of March West Texas Intermediate crude (WTI) in the United States was up 78 cents, or 1.02%, at $77.12 at 0146 GMT.
Because of a public holiday in the United States, WTI futures did not settle on Monday. The most active contract, WTI April, was up 52 cents, or 0.68%, at $77.07.
“The U.S. dollar strengthened and pressed on the oil price in the Asian session today, causing a pullback in the oil markets from yesterday’s rebound,” said Tina Teng, an analyst at CMC Markets.
Traders are looking forward to the minutes of the most recent Federal Reserve meeting, which are coming on Wednesday, since data on core inflation has boosted the prospect of interest rates being higher for longer.
With China’s oil imports expected to reach a new high in 2023 and demand from India, the world’s third-largest oil importer, growing despite tighter supplies, all eyes are on monetary policy in the world’s largest economy and greatest oil user.
Experts believe oil prices will climb in the next weeks due to undersupply and a comeback in demand, despite near-term obstacles such as interest rate rises in the United States.
“Chinese demand for Russian crude is back to the levels seen at the beginning of the war in Ukraine,” said Edward Moya, an analyst at OANDA.
“The West will try to pressure China and India from seeking alternative sources, which should keep the oil market tight,” Moya said.
As the West placed price limitations on Russian oil and oil products, Russia expects to reduce oil production by 500,000 barrels per day (bpd), or nearly 5%, in March.
“Despite the short-term price action to the U.S. excessive inventory build from last week, oil markets still face an undersupply issue due to China’s reopening and upcoming Russia’s output cuts,” CMC’s Teng said.