Oil prices settle higher as positive demand outlook offsets stronger dollar
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Investing.com– Oil prices settled higher on Tuesday, as ongoing geopolitical tensions and a healthier demand outlook supported sentiment offsetting a surge in the dollar following stronger inflation data.
At 14:30 ET, the West Texas Intermediate crude futures rose $0.95 cents to $77.98 a barrel, while brent oil futures expiring in April $0.77 cents to $82.77 a barrel.
Both contracts were closing in on two-week highs, although trading volumes were held back by a week-long holiday in China.
OPEC Sees Higher Demand
OPEC sees the demand for crude oil rising by 2.2 million barrel per day this year, with to 106.2 million barrels per day next year, with non-OPEC production expected to rise 1.2 million, pointing to demand outstripping supply.
The forecast was in contrast, however, the International Energy Agency said growing oil output from the America will more than offset demand growth this year.
The update come as OPEC said it was on track to meet its production cut agreement, with “Iraq saying it is now meeting its output quota under the accord. Its production is now capped at 4mb/d,” ANZ Research said in a note.
Stronger dollar brushed aside
The dollar surged as investors dialled back expectation for a earlier rate cut, with the first cut now expected in June rather May.
Headline annual U.S. inflation slowed to 3.1% pace in January, from 3.4% a month earlier, but that was still above economists estimates of 2.9%.
A stronger dollar makes oil, priced in the U.S. dollars, more expensive for buyers in other currencies, weighing on demand.
Geopolitical tensions remain in focus as Gaza ceasefire talks resume
The US, Israel, Egypt and Qatar resumed talks on a ceasefire deal to temporarily halt the step-up in escalations in Gaza as Israel prepares for a ground invasion of the Southern Gaza city.
The prospect of a breakthrough, however, remain uncertain after Israeli Prime Minister Benjamin Netanyahu rejected a Hamas proposed ceasefire deal, stressing that a “total victory” was within reach.
Adding to the geopolitical tensions, Houthi rebels resumed their attacks on ships in the Red Sea, hitting an Iran-bound grain ship.
