ALBAWABA - Oil prices rose on Tuesday amid concerns that tensions in the Middle East could disrupt supplies, but uncertainty about the pace of potential interest rate cuts in the United States and its impact on fuel demand limited the gains.
By 0420 GMT, Brent crude futures rose seven cents, or 0.1%, to $82.07 per barrel. West Texas Intermediate (WTI) crude increased 10 cents, or 0.1%, to $77.02 per barrel.
Oil prices were largely stable in Monday's trading after gaining 6% the previous week, with the conflict in the Middle East keeping prices elevated.
The Houthi rebels, aligned with Iran in Yemen, launched two missiles on Monday at a ship heading to Iran in the Red Sea. The group has been attacking international ships with business ties to the United States, Britain, and Israel since mid-November in solidarity with the Palestinians, while Israel wages a war against Hamas in the Gaza Strip.
US moves to tighten or enhance sanctions on Iran could impact oil market supplies.
However, concerns about interest rates limited the oil gains. The Federal Reserve Bank of New York said in its survey of consumer expectations for January that inflation expectations five years from now remained unchanged, with both staying above the Federal Reserve's target rate of 2%.
If concerns about inflation lead to a delay in the US central bank's interest rate cuts, it could reduce oil demand by slowing economic growth.
US inflation data is expected to be released today, Tuesday, while Eurozone inflation and GDP data are scheduled for release tomorrow, Wednesday.
Market participants are also awaiting sector data on US crude inventories, which is expected to be released later today.
OPEC's monthly report on the oil market is also due to be released today, Tuesday. Iraq, an OPEC member, said yesterday that it is committed to the organization's decisions and will not produce more than four million barrels per day.
In a note on Tuesday, analysts at I.N.G. said, "The most interesting thing in the coming weeks will be what OPEC+ decides to do with the voluntary supply cuts that expire at the end of March."
They added, "Our balances indicate that the market will have a surplus in the second quarter of 2024 if the group does not extend some of these cuts."
The OPEC+ group, which includes OPEC and allies such as Russia, will decide in March whether to extend voluntary oil production cuts in the first quarter.
In November, OPEC+ agreed to voluntary production cuts totaling around 2.2 million barrels per day for the first quarter of this year, led by Saudi Arabia with a voluntary cut of one million barrels per day.
