Oil prices fell on Tuesday as traders awaited direction from US inflation data due later this week, as well as a strong dollar that discouraged buyers of dollar-indexed crude oil and the shutdown of more than 250,000 barrels per day (bpd) of oil in Canada’s Alberta province due to wildfires.
International benchmark Brent crude traded at $76.56 per barrel at 10.09 a.m. local time (0709 GMT), a 0.58% decrease from the closing price of $77.01 a barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $72.78 per barrel, down 0.52% from the previous session’s close of $73.16 per barrel.
Oil prices recorded their steepest declines over the last eight weeks, dropping over 7% last week, on fears of weak demand following the US Fed’s decision to raise interest rates for the tenth time in just over a year and on signs of another banking crisis in the US.
Prices eased in early trading on Tuesday as investors await US consumer price inflation figures for April due on Wednesday.
Although market sentiment was boosted by better-than-expected employment data in the US, the country’s upcoming inflation data forced investors to take a ‘wait and see’ stance amid an already high dollar index.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, rose 0.07% to 100.21 early Tuesday.
If the value of the US dollar increases, dollar-indexed crude oil becomes more expensive for buyers holding other currencies.
The price decline, however, was limited by indicators of improved oil demand, with signs of a rebound in both domestic and international air traffic in China, the world’s largest oil importer and second-largest oil consumer, allaying concerns about weak demand.
Further price increases were also hampered as Canada battled wildfires in Alberta, where a province-wide state of emergency was declared on Saturday, evacuating more than 24,000 residents and shutting down 280,000 bpd of oil production.
