By Ambar Warrick
Investing.com-- Oil prices rose slightly on Monday as a delay in the resumption of a key Canada-U.S. oil pipeline pointed to some tightening in supply, although caution ahead of a Federal Reserve meeting and key inflation data due this week limited gains.
Brent oil futures, the global crude benchmark, rose 0.1% to $76.18 a barrel, while West Texas Intermediate (WTI) crude futures, the U.S. benchmark, rose 0.4% to $71.31 a barrel by 21:38 ET (02:38 GMT). The two contracts logged sharp losses in the prior week.
Both contracts remained pinned near their weakest levels in a year, as the near-term outlook for crude demand was decimated by the prospect of high inflation, slowing economic growth, and rising interest rates.
Oil futures took some support on Monday from the prospect of tightening U.S. supplies, especially as Canada's TC Energy (NYSE:TRP), which operates the Keystone pipeline, said it will not give a timeline for when the pipeline will resume operation after a leak last week. s
The pipeline is a key source of crude supplies from Canada to the U.S. Midwest and Gulf Coast.
Uncertainty over Russian supply also benefited crude prices, after Moscow threatened to cut production in response to U.S. and European price caps on the country’s oil shipments. But analysts said that the price caps, which were much higher than expected, will have a limited impact on crude markets.
Focus is now squarely on key U.S. consumer inflation data, as well as the Federal Reserve’s final meeting for the year later this week.
The Fed is widely expected to hike interest rates by 50 basis points at the conclusion of a two-day meeting on Wednesday.
But before that, markets are awaiting the release of U.S. CPI inflation data on Tuesday. Any signs that inflation remained more stubborn than expected in November are likely to elicit a hawkish response from the Fed, heralding steeper interest rates.
Rising U.S. interest rates were a major weight on crude prices this year, as liquidity dried up and as slowing economic growth weighed on demand.
A series of COVID-linked lockdowns in China also weighed heavily on demand. While the country recently began relaxing some movement curbs, markets remained cautious over a demand recovery in the country, given that it is struggling with a record-high increase in COVID cases.