International oil prices fell more than 1%, giving up some of the overnight gains of more than 2%. Investors were cautious ahead of the release of U.S. inflation data for April. This will be a key reference indicator for the Fed's next interest rate decision. But easing fears of a U.S. recession and wildfires in Alberta, Canada, were expected to limit oil price losses. We see investors building long positions in gold futures and ETFs, and the spot market is also showing some resilience to higher prices. "
Suvro Sarkar, chief energy analyst at DBS Bank, said: "Oil prices have rebounded in the past two sessions, so it is time to pause ... There is no real positive data coming out. The market is cautious today ahead of the inflation data ... …With net long positions falling sharply over the past two weeks, many traders have exited the market, so volumes are low.”
U.S. consumer price index (CPI) data for April will be released on Wednesday (May 10). U.S. consumers said in March they expected inflation to be slightly lower a year from now, according to a report from the New York Fed on Monday. The Fed may have led the final rate hike of this tightening cycle last week. It dropped guidance on the need for future rate hikes as inflationary pressures began to ease.
CMC Markets analyst Leon Li said: "If tomorrow's CPI data is in line with the market consensus - maintained at around 5%, and the core CPI does not fall sharply, it is likely to continue to support the rise in oil prices."
Despite sharp losses in the oil market last week, marking a third straight weekly loss, oil prices rose on Friday and Monday as recession fears eased in the United States, the world's largest oil consumer, and some traders saw crude The sequential slide was overdone on demand concerns.
"Oil prices rallied (on Monday) after energy stocks rallied on Wall Street after strong U.S. jobs data on Friday eased fears of an impending recession," said Tina Teng, an analyst at CMC Markets.
Also supporting oil prices, the Canadian province of Alberta declared a state of emergency over the weekend in response to wildfires that displaced nearly 30,000 people and prompted energy producers to shut in at least 280,000 bpd of oil equivalent - more than 3% of Canada's output . The government said it could take months to get all the fires under control.
Canada is the world's fourth-largest crude oil producer, with about 80 percent of its oil coming from Alberta. The fires mainly affected light oil and natural gas producers, who shut down operations as a precaution. So far, there have been no reports of casualties or damage to facilities.
Analysts at Stifel FirstEnergy said in a research note: "While we remain optimistic about a safe and rapid resumption of production, if output is affected for an extended period, the impact on some of the affected companies could be meaningful. "
Pipeline company Enbridge Inc said its assets were operating normally, but the company did "expect some small fluctuations in production as some customers upstream may be affected," according to a statement.