Oil edged lower as investors weighed the prospect for further U.S. monetary tightening against signs of improving demand from China following the end of COVID Zero.
Brent futures retreated below US$84 a barrel after closing 1.3 per cent higher on Monday. Prices have bounced within a relatively tight range this year, and a measure of volatility remains near the lowest level in 13 months.
Market watchers continue to weigh concerns that more Federal Reserve interest-rate hikes will sap demand, against expectations that China's reopening will drive an increase in commodity buying. The world's largest importer has been buying more oil from Russia and snapping up ships for cargoes from the U.S. as it ramps up imports.
Indian refiners have also boosted processing, lifting rates in January to the highest in five years on the back of rising domestic demand. The country has also been a key consumer of Russian crude, taking advantage of discounted cargoes.
The next key event that investors are awaiting is Wednesday's release of minutes from the Fed's last meeting. That, and U.S. personal spending data on Friday, may provide further clues of the path for rates.
“Any hawkish takeaway from the upcoming Fed minutes may be a catalyst for further downward pressure for oil,” said Yeap Jun Rong, a market strategist at IG Asia Pte Ltd. Prices have attempted to climb on the improving supply-and-demand outlook that's coinciding with China's recovery, he added.
Prices:
- Brent for April settlement lost 0.4 per cent to US$83.77 a barrel as of 10:22 a.m. in London.
- WTI for March delivery, which expires Tuesday, rose 0.5 per cent from Friday's close to US$76.75 a barrel.
- There was no settlement Monday due to the US holiday and transactions will be booked Tuesday.
- The April contract gained 0.9 per cent to US$77.25 a barrel.
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