Oil prices edged higher Tuesday as the US dollar dropped slightly against a basket of currencies, but the gains were reined back by fears of slumping global fuel demand as China’s delayed economic data showed bearish results in the third quarter due to its strict zero-COVID policy. Brent crude for December contracts, which ends on October 31, was up by 0.2% to $93.45 a barrel as of 10:38 am GST Tuesday, after settling at $93.26 a barrel the previous session.
US West Texas Intermediate (WTI) crude slightly rose by 0.33% to $84.86 a barrel around the same time, following its settlement at $84.58 the previous session.
The rise in oil prices is underpinned by a drop in the US dollar against major peers, making consumers spend less to purchase dollar-denominated oil as the greenback has an inverse relationship with the fuel.
However, the gains were limited by signs of receding oil demand in some of the major world economies. In a monthly S&P Global survey released Monday, US business activity was shown to be contracting for the fourth month in October, with manufacturers and service providers stating that overall demand is going down following the multiple increases in the Federal Reserve's interest rates amid its battle against inflation.
"The intraday price swings aside, Brent and WTI futures are stuck in a relatively narrow band since Thursday," said Vandana Hari, founder of oil market analysis provider Vanda Insights, as cited .
Oil gains are expected to be further curbed this week as US crude oil inventories are projected to rise, according to Reuters, building on the gains of last week which stood at 200,000 barrels.
U.S. crude oil inventories are also expected to rise this week, which may limit price gains. Analysts polled by Reuters estimated on average that crude inventories rose by 200,000 barrels in the week to Oct. 21.
China, the world’s top crude importer, experienced an oil demand drop by 2% in September, down from the same period last year, as independent refiners curbed throughput amid thin margins and weak demand, Reuters reported, citing data released Monday.
