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Crude oil steady ahead of key inflation data, Fed meeting

Published 11/06/2024, 14:12
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Investing.com -- Oil prices traded largely unchanged Tuesday, as traders prepared for a Federal Reserve rate-setting meeting as well as key inflation data from both the U.S. and China. 

By 09:10 ET (13.10 GMT), the U.S. crude futures traded flat at $77.73 a barrel and the Brent contract climbed 0.2% to $81.77 a barrel. 

Fed meeting, inflation data loom large

The crude benchmarks posted strong gains on Monday, buoyed by expectations that the Northern Hemisphere summer vacation season will boost fuel demand this summer. 

This represented something of a recovery after last week’s sharp losses in the wake of the meeting by the Organization of Petroleum Exporting Countries and their allies, a group known as OPEC+, which indicated the possibility of an increase in supply to market by the end of the year.

“Oil prices moved higher yesterday as the market continued its post-OPEC+ meeting recovery,” said analysts at ING, in a note. “As we mentioned following the meeting, the action taken by the group leaves the market with a sizeable deficit in the third quarter of the year, supporting the view that prices trend higher.”

That said, traders are reluctant to drive the market too much higher ahead of the conclusion of the Fed’s latest policy meeting on Wednesday, the same day as inflation is due from both the U.S. and China, the two biggest crude consumers in the world.

The Fed keeping interest rates at elevated levels for longer than expected could hit economic activity in the future, while deflation can see purchases dry up as businesses and consumers expect to pay less later as prices fall, hitting economic activity and dampening oil demand.

US crude stockpiles due - API

Traders will also be keeping an eye out for the latest estimate of U.S. crude stockpiles from the American Petroleum Institute later in the session.

Data released last week showed that crude inventories increased by about 4.0 million barrels for the week ended May. 29, a surprise given that economists were expecting a decrease of 1.9M barrels. 

Gasoline stockpiles rose by 4.03M barrels, while distillate inventories -- the class of fuels that includes diesel and heating oil -- increased by 2.0M barrels.  

The official government inventory report is due Wednesday.

 

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