Oil Prices Edge Up on Bargain Hunting, but Worries Remain
Oil prices rose on Tuesday, recovering some ground after a sharp decline in the previous session. However, gains were limited as investors remained cautious ahead of key policy decisions by central banks and on weak economic data from China.
Brent crude futures climbed 80 cents, or 1.1%, to $72.64 a barrel by 0825 GMT. U.S. West Texas Intermediate (WTI) crude was at $67.64 a barrel, up 52 cents, or 0.8%.
The gains came after oil prices plunged by more than $3 a barrel on Monday, as analysts highlighted rising global supplies and concerns about demand growth.
The rebound in oil prices on Tuesday was likely due to bargain hunting by investors, who saw the sharp decline in prices as an opportunity to buy. However, gains were limited as investors remained cautious ahead of key policy decisions by central banks and on weak economic data from China.
The U.S. Federal Reserve is expected to leave interest rates unchanged at its meeting on Wednesday, but the market will be closely watching for any hints about future rate hikes. The European Central Bank is also expected to hike interest rates by another quarter percentage point on Thursday.
In China, disappointing economic data last week raised concerns about demand growth in the world’s largest crude importer. The country’s central bank lowered a short-term lending rate on Tuesday to restore market confidence.
Demand jitters offset a temporary boost in oil prices from Saudi Arabia’s pledge to cut more production in July.
Oil demand outlooks from the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) due on Tuesday and Wednesday, respectively, will provide further trading cues.
Overall, the outlook for oil prices remains uncertain, as they are being weighed down by concerns about demand growth and rising supplies. However, bargain hunting by investors could support prices in the near term.