Oil prices were stable on Tuesday as the market awaited the Federal Reserve’s plans for rate hikes to gauge the impact on the economy and fuel demand.
Brent futures for March were up 15 cents, or 0.19 per cent, to $79.80 a barrel by 1036 GMT. U.S. West Texas Intermediate crude rose 32 cents, or 0.43 per cent, to $74.95.
Two U.S. Federal Reserve officials said on Monday that they expected the Fed policy rate – now at 4.25 per cent to 4.5 per cent – would need to rise in steps to 5.0-5.25 per cent to bring higher inflation rates under control.
Fed policy-makers said fresh inflation data out on Thursday will help them decide whether they can slow the pace of interest rate hikes at their upcoming meeting, to just a quarter point increase instead of the larger jumps they decreed for most of 2022.
Thursday’s data “could easily clarify the direction of the financial and oil markets for weeks to come”, said Tamas Varga of oil broker PVM.
He said the dollar would fall if inflation came in below expectations or was below the November reading, Varga added.
A weaker dollar can boost demand for oil, as dollar-denominated commodities become cheaper for holders of other currencies.
U.S. Federal Reserve Chair Jerome Powell is scheduled to speak at a central bank conference at 1400 GMT.
Both WTI and Brent climbed 1 per cent on Monday, after China, the world’s biggest oil importer and second-largest consumer, opened its borders over the weekend for the first time in three years.
China also issued a second batch of 2023 crude import quotas, raising the total for this year by 20 per cent from last year.
But analysts said that a revival of Chinese demand may only give oil prices limited support under downward pressure from the global economy.
“Considering that the recovery of consumption is still at the expected stage, the oil price will most likely remain low and range-bound,” said analysts from Haitong Futures.
Separately, U.S. stockpiles of crude oil and distillates were expected to have fallen last week, a preliminary Reuters poll showed on Monday.
Industry group American Petroleum Institute is due to release data on U.S. crude inventories at 4:30 p.m. EDT (2030 GMT) on Tuesday.