Crude oil futures pared early gains and settled just slightly up on Tuesday, after data from the Labor Department showed U.S. consumer price inflation increased by slightly less than expected in the month of August, and traders weighing the impact of tropical storm Nicholas.
The Labor Department said its consumer price index rose by 0.3% in August after climbing by 0.5% in July. Economists had expected consumer prices to increase by 0.4%.
Excluding food and energy prices, core consumer prices inched up by just 0.1% in August after rising by 0.3% in July. Economists had been expecting another 0.3% increase.
The relatively tame inflation data initially generated optimism that the Federal Reserve may delay plans to begin scaling back stimulus.
Traders also noted a report from the International Energy Agency (IEA) that forecast a robust rebound in the market from the fourth quarter of the year citing "strong pent-up demand and continued progress in vaccination programmes".
IEA wrote in its monthly oil report that demand will rebound by a sharp 1.6 million barrels per day (bpd) in October, and will continue to grow until end-year.
OPEC has also raised the outlook for oil demand in 2022.
Crude oil futures settled at $70.46 a barrel, up a penny from the previous close, after climbing to a high of $71.22 a barrel earlier in the day.
Brent crude futures were up $0.16 or 0.21% at $73.67 a barrel a little while ago.
OPEC says it expects oil demand to average 100.8 million barrels per day in 2022, compared with just over 100 million in 2019, before the pandemic took hold.
Meanwhile, energy firms are bracing for another storm just weeks after Hurricane Ida wreaked havoc on the Gulf Coast. Nicholas made landfall on the Texas coast as a Category 1 hurricane early today, with 75 mph winds and threatening to bring up to 18 inches of rain to parts of the state, forecasters said.
Nicholas, which was downgraded from a hurricane to a tropical storm after making landfall along the Texas coast, still had the power to cause "life-threatening flash floods in the deep south in the next couple of days," the National Hurricane Center said.
Traders now look ahead to weekly inventory reports from the American Petroleum Institute (API) and Energy Information Administration (EIA). The API's report is due later today, while EIA's data is scheduled to be released Wednesday morning.