Perth: Oil prices eased on Tuesday, as investors continued to watch for new monetary policy announcements by China to tame high inflation, and ahead of U.S. oil industry stocks data.
Data showing higher oil demand in China and the lack of any announcement about an interest rate hike over the weekend continued to provide underlying support, analysts said.
US crude for January slipped 8 cents to $88.53 a barrel by 12:35pm, ICE Brent eased 7 cents to $91.12.
China’s inflation rose to a 28-month high of 5.1% in the year to November, government data released over the weekend showed. While China did raise cash reserve requirements for banks, it did not move as expected to hike interest rates, which is seen as supportive for commodities.
“If nothing is going to be slowing their economy down in the short term, the market views that as a positive,” said David Taylor, an analyst at CMC Markets in Sydney.?
China’s implied oil demand in November rose 13.7% from a year earlier to a record of nearly 9.3 million barrels per day, Reuters calculations based on preliminary official data showed on Monday.
The rise in implied oil demand shows continued robust growth, Taylor said.
“In the long term, it raises massive question marks about how they are going to slow their economy. In the short term, the market likes it and commodity markets like it, too,” Taylor said.
Cold winter weather in the United States and Europe is also seen boosting energy demand.
Temperatures trending colder central and eastern areas of Europe over the next few days, moving west by late week with heating energy demand above average. In the US Midwest, temperatures are also expected to be below normal through much of the week.
US crude oil inventories were expected to have fallen last week, according to a Reuters survey of analysts on Monday. Crude stocks were estimated to be lower by 2.2 million barrels, with distillate stockpiles seen down 500,000 barrels.
Gasoline stockpiles were expected to be up 1.8 million barrels.