Oil prices edged lower on Tuesday as a stronger U.S. dollar and weak oil data from top crude importer China shifted momentum after five days of gains.
U.S. West Texas Intermediate crude was down 41 cents, or 0.51%, at $80.01.
Brent crude futures fell 53 cents, or 0.61%, to $85.65 a barrel.Prices declined as the U.S. dollar rose ahead of Federal Reserve Chair Jeremy Powell’s testimony to Congress at 1500 GMT on Tuesday.
The focus will be on whether he remains confident that the Fed is on the right path to keep inflation on a steady decline towards its 2% target.
A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.
Further pressure came from a contraction in China’s exports and imports in January and February, including crude oil imports. The decline came despite a lifting of COVID-19 restrictions, pointing to weakness in foreign demand.
“Given the high inflation in the U.S. and Europe, demand from there should keep weakening, which also dampens processing demand in China,” said Iris Pang, ING’s chief economist for Greater China.
Declines were limited, however, by supply concerns. Chevron (CVX.N) Chief Executive Mike Wirth on Monday told a Houston conference that there is “not a lot of swing capacity”, making the global market vulnerable to any unexpected supply disruption.
“The key unknown for 2023 will be the disruption to Russia’s oil and refined product exports,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
U.S. crude inventories could register their first decrease in 10 weeks, a Reuters poll showed before official data is published this week.
The American Petroleum Institute’s weekly report is due at 2130 GMT on Tuesday, with Energy Information Administration data following at 1530 GMT on Wednesday.