Oil prices edge higher after supply jitters trigger sharp gains

© Reuters

Investing.com– Oil prices rose in Asian trade on Tuesday, extending the prior session’s gains as fears of tighter supplies- amid continued disruptions in global shipping activity and a conflict in the Middle East- sparked a strong recovery in prices this week.

Still, crude prices remained largely within a $75 to $85 a barrel range established over the past two months, as any major price gains were held back by concerns that sticky inflation and higher-for-longer interest rates will weigh on demand. 

Brent oil futures expiring in April rose 0.2% to $82.70 a barrel, while West Texas Intermediate crude futures rose 0.2% to $77.72 a barrel by 20:10 ET (01:10 GMT). 

Goldman Sachs analysts said in a recent note that they largely expected oil to remain within $70 to $90 a barrel in the near-term. 

Fresh Red Sea strikes spur concerns over shipping disruptions

U.S.-led forces conducted new strikes on the Iran-backed Yemeni Houthis in the Red Sea, after the group continued to attack ships in the region in solidarity with Palestine over the Israel-Hamas war. 

The war also showed little signs of de escalation, after the U.S. earlier in February shot down a United Nations resolution for a ceasefire, while Israel also rejected a proposal from Hamas. 

Fears of supply disruptions, particularly in the Middle East, have provided oil prices with a floor in recent months, especially as the outcome of the Israel-Hamas war remains uncertain.

Econ. data deluge on tap 

Markets were also awaiting key economic cues from several major economies this week.

Most importantly was U.S. PCE price index data, which is the Federal Reserve’s preferred inflation gauge, and is largely expected to factor into the outlook for interest rates.

A second reading on fourth-quarter U.S. GDP data is also set to provide more cues on the world’s largest economy.

Purchasing managers index data from China is also on tap this week, and is expected to factor into the economic outlook for the world’s largest oil importer. 

Recent signs of increased stimulus measures and improvements in consumer spending helped inspire some confidence over a recovery in China.