Oil prices steady as supply cuts counter economic headwinds

Oil prices were little changed on Tuesday as traders weighed supply cuts by the world’s biggest oil exporters and hopes for higher demand in the developing world in the second half of 2023 against a sluggish global economic outlook.

Brent crude futures rose 35 cents to $78.04 a barrel by 01127 GMT and U.S. West Texas Intermediate crude was up 38 cents at $73.37.

Supply cuts by top exporters Saudi Arabia and Russia for August helped to lift the benchmark prices, which were also supported by the U.S. dollar hitting a two-month low.

A weaker dollar makes crude cheaper for holders of other currencies and often boosts oil demand.

“Oil has found a floor and the only thing … that could break that is if U.S. inflation is scorching hot and the Fed is forced to tighten this economy into a recession,” said OANDA analyst Edward Moya.

Markets are awaiting U.S. inflation data on Wednesday to see if price pressures are continuing to moderate, which could provide clues on the interest rate outlook.

While central bank officials said the U.S. Federal Reserve is likely to raise interest rates further to tame inflation, markets are somewhat pacified by indications that months of monetary policy tightening are nearing an end.

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