Oil prices fell on Tuesday, relinquishing some of the strong gains of the previous two sessions with the market cautious ahead of U.S. inflation figures for April, which will be key to the Federal Reserve’s next interest rate decision.
The Brent crude price was down 54 cents, or 0.7 percent, at $76.47 and U.S. West Texas Intermediate (WTI) crude fell 50 cents, or 0.7 percent, to trade at $72.66 at 0650 GMT.
Both contracts had settled up more than 2 percent in the previous trading session.
“Oil prices have rebounded somewhat in the last two sessions, so now is time for a pause … with no real positive data coming out,” said Suvro Sarkar, lead energy analyst at DBS Bank.
“The market is cautious today ahead of the inflation data…. With net long positions declining sharply over the last two weeks, a lot of traders are already out of the market, so volumes are low.”
READ ALSO: In a tit-for-tat diplomacy, China expels Canadian diplomat in Shanghai
U.S. consumer price index (CPI) figures for April are due on Wednesday.
The Fed raised rates last week in what may be the last hike of its tightening cycle. It dropped guidance about the need for future hikes, with inflationary pressure starting to ease.
U.S. consumers said last month they expected slightly lower inflation in a year’s time, a report from the New York Federal Reserve showed on Monday.
“If tomorrow’s CPI data remains at around 5 percent by market consensus, and if the core CPI does not drop significantly, it will likely continue to support the rise in oil prices,” said CMC Markets analyst Leon Li.
While oil markets fell sharply last week, prices rose on Friday and Monday as fears of recession eased in the U.S., the world’s biggest oil consumer and some traders saw crude’s three-week slide on demand worries as overdone.
Also supporting oil prices, the Canadian province of Alberta declared a state of emergency over the weekend in response to wildfires that have displaced nearly 30,000 people and prompted energy producers to shut in at least 280,000 barrels of oil equivalent per day, more than 3% of Canada’s output.
