By Ambar Warrick
Investing.com -- Oil prices rose on Tuesday as signs of a growing rebound in Chinese travel demand pushed up hopes of increased crude consumption this year, although anticipation of more cues on the U.S. economy this week kept broader gains limited.
Reuters reported that Chinese airlines were undertaking massive hiring drives to position for an expected rebound in travel demand this year, after the country relaxed most anti-COVID restrictions. A recovery in Chinese travel demand is expected to be one of the biggest drivers of crude consumption this year.
But data showed on Tuesday that Chinese inflation read weaker than expected in March, indicating that an economic recovery was still struggling to gain steam after the lifting of anti-COVID measures.
Still, markets were sitting on stellar gains from last week after the Organization of Petroleum Exporting Countries and allies (OPEC+) unexpectedly cut production, pointing to tighter oil supply in the coming months.
Brent oil futures rose 0.6% to $84.68 a barrel, while West Texas Intermediate crude futures rose 0.6% to $80.25 a barrel by 22:17 ET (02:17 GMT).
Crude prices retreated on Monday, coming under pressure from a recovery in the dollar as U.S. nonfarm payrolls data pointed to some resilience in the jobs market, giving the Fed more headroom to keep raising interest rates.
The reading raised some concerns over U.S. interest rates continuing to rise in the near-term, which could weigh on economic activity and potentially dent crude demand this year.
Focus is now squarely on U.S. consumer price index inflation data due on Wednesday, which is expected to have remained steady in March from the prior month.
The minutes of the Fed’s March meeting are also due on Wednesday, and are expected to provide more cues on the central bank’s stance on future rate hikes. The Fed had hiked rates by 25 basis points during the meeting, and vowed to keep tightening policy to combat high inflation, despite growing fears of a banking crisis.
Any signs that U.S. interest rates will rise further are likely to pressure oil markets, given that traders are wary of an economic slowdown this year.
Focus this week is also on monthly oil market reports from the OPEC and the International Energy Agency, due on Thursday and Friday, respectively. The two groups expect a recovery in China to drive oil demand to record highs this year.