Futures on US West Texas Intermediate Crude Oil surged 1% on Tuesday, underpinned by optimism a strong economic rebound in China will bolster fuel demand.
However, WTI Crude Oil Futures looked set to register a fourth consecutive month of losses, being down 4.56% so far in February.
Expectations over Chinese oil demand recovery supported the oil market, with focus on key data over the upcoming two days. Analysts expect China to report growth in factory activity in February.
Still, January’s stronger-than-anticipated new orders for core US-manufactured capital goods reinforced prospects of more rate hikes by the Federal Reserve, while restraining oil gains.
“The stronger than expected inflation numbers raised concerns about further hikes in interest rates, which has already curbed demand in the U.S.,” ANZ analysts wrote in an investor note.
Market players will be paying attention to the industry report on US oil stocks by the American Petroleum Institute later on Tuesday as well as the government report by the Energy Information Administration on Wednesday for more clues over demand.
Analysts polled by Reuters expect US crude inventories to increase by 400,000 barrels in the week to February 24th, which would be the 10th straight week of stock builds.
As of 9:01 GMT on Tuesday WTI Crude Oil Futures were gaining 1.03% to trade at $76.46 per barrel. Last week, the black liquid went up as high as $77.74 per barrel, which has been its strongest price level since February 17th ($78.25 per barrel).
At the same time, Brent Oil Futures were gaining 0.89% on the day to trade at $82.77 per barrel.