Oil prices react cautiously to US inflation concerns

Oil prices in Asia experienced a downward trend on Tuesday as investors prepared for the potential impact of US inflation and looming interest rate hikes on consumer and industrial demand. Brent crude futures saw a decrease of 0.68 percent, settling at $83.14 per barrel, while US West Texas Intermediate crude slipped by 0.73 percent to $79.22 per barrel.

The market responded cautiously to statements from US Federal Reserve officials, who expressed hesitance towards considering interest rate cuts until there are clearer indications of slowing inflation. This cautious approach raised worries about weakened demand, contributing to the drop in oil prices.

Despite uncertainties in major oil-producing nations like Iran, the market remained relatively stable. Investors are keeping a close eye on the upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+), scheduled for June 1, to evaluate potential impacts on output policies.

Analysts believe that oil prices are in need of a significant catalyst to break out of the current range, with a focus on geopolitical developments and forthcoming oil inventories data. If demand does not exhibit signs of improvement, OPEC+ might contemplate extending voluntary output cuts.

As oil prices in Asia continue to be influenced by US inflation concerns and interest rate uncertainties, the market remains watchful for potential shifts in demand and output policies. The upcoming OPEC+ meeting holds significance in determining the future trajectory of oil prices, with analysts emphasizing the need for a substantial catalyst to drive any significant changes in the market.