Oil prices on Tuesday mostly held onto gains made a day earlier amid attacks on shipping in the Red Sea that have exacerbated supply worries.
Brent crude futures fell 1 cent to $82.52 a barrel by 0435 GMT, while U.S. West Texas Intermediate crude futures (WTI) rose 1 cent to $77.59 a barrel.
“Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation,” said Tony Sycamore, an analyst at IG in Sydney.
The attacks by Iran-aligned Houthis in support of Palestinians have increased freight rates and shipping times. On Monday, U.S. Central Command said that the Houthis had unsuccessfully fired a missile at the U.S. flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.
U.S. President Joe Biden said on Monday he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday. In public, Israel and Hamas continued to take positions far apart on a possible truce, while blaming each other for delays.
Both oil benchmarks settled more than 1% higher on Monday which followed declines of 2%-3% over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.
Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates. High borrowing costs typically reduce economic growth and oil demand.
Oil prices were also supported on Tuesday by indications of improved demand in China.
“Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. This is despite them having planned more maintenance halts than usual,” analysts from ANZ Bank said in a note.
A market focus for the day will be the American Petroleum Institute industry group’s weekly data on U.S. crude inventories which is due to be released at 4:30 p.m. EST (2130 GMT).
Analysts polled by Reuters on Monday estimated on average that crude inventories rose by about 1.8 million barrels in the week to Feb. 23.
(Reporting by Arathy Somasekhar in Houston and Andrew Hayley in Beijing; Editing by Muralikumar Anantharaman and Edwina Gibbs)