Oil prices steady near 10-mth highs with OPEC, CPI in focus

Investing.com-- Oil prices moved little in Asian trade on Tuesday as markets awaited forecasts on supply and demand from an OPEC report due later in the day, although optimism over recent supply cuts kept prices near 10-month highs.

Investors were also on edge before key U.S. inflation data due this week, which is likely to set the tone for a Federal Reserve meeting next week. The dollar surged to a near six-month high in anticipation of the reading. 

Oil prices were still sitting on strong gains over the past week, aided chiefly by bigger than expected supply cuts from major producers Saudi Arabia and Russia. The cuts helped dispel some gloom over worsening global economic conditions, which traders fear could dent demand. 

Brent oil futures moved little at $90.65 a barrel, while West Texas Intermediate crude futures steadied at $87.33 a barrel by 21:09 ET (01:09 GMT). 

OPEC report on tap

Oil markets were now focused squarely on a monthly report from the Organization of Petroleum Exporting Countries, due later in the day.

The cartel is expected to offer more cues on supply, especially in the face of recent cuts by Saudi Arabia and Russia. Any forecasts on demand will be in focus, especially amid growing concerns that a resurgence in inflation will invite more interest rate hikes from major central banks.

Any forecasts on China will also be watched, amid dwindling bets that the country will drive oil demand to record highs this year. While China’s oil imports have remained largely strong this year, cooling economic activity in the country has raised concerns over local fuel demand.

Still, recent economic prints showed some improvement in China, particularly in inflation and lending activity, as the government continued to roll out monetary support. 

Beyond the OPEC, the International Energy Agency is also set to release its monthly report on Wednesday. 

Dollar strength weighs ahead of CPI data 

While the greenback saw some losses this week, it remained close to six-month highs as markets remained fearful of a resurgence in U.S. inflation. 

Data on Wednesday is expected to show that consumer price index inflation grew at a faster pace in August than July, amid strong consumer spending and a resurgence in fuel costs. 

Rising inflation could elicit a more hawkish outlook for the Federal Reserve, with any more rate hikes by the central bank expected to weigh on economic activity in the coming months. 

A stronger dollar also weighs on crude demand by making oil more expensive for international buyers.