By Laila Kearney
NEW YORK (Reuters) -Oil prices were little changed on Thursday as U.S. inflation data reinforced expectations for a June cut to interest rates, which sent mixed signals about the outlook for crude demand from the world's top economy.
Brent crude futures for April delivery, which expires on Thursday, rose 3 cents to $83.71 a barrel by 1:40 p.m. EST (1840 GMT). The more active May contract, was down 1 cent at $82.14. The April U.S. crude contract, lost 2 cents to $78.52 per barrel.
Global benchmark Brent has hovered comfortably above the $80 mark for three weeks, with the Middle East conflict having only a modest impact on crude flows.
However, the conflict shows few signs of abating, with both Israel and Hamas playing down prospects for a truce in their war in Gaza. Qatari mediators have said the most contentious issues remain unresolved.
President Joe Biden said the U.S. was checking reports of Israeli troops firing on people waiting for food aid in Gaza and that he believes the deadly incident will complicate talks on a ceasefire.
A Reuters survey of 40 economists and analysts forecast an average price of $81.13 a barrel for the front-month contract this year.
Meanwhile, the Federal Reserve's preferred inflation gauge, the U.S. personal consumption expenditures (PCE) index, showed January inflation in line with economists' expectations, keeping a June interest rate cut on the table.
"The economic data, which is mixed, is helping to argue for interest rate cuts for the Fed, which is supportive of oil demand," said John Kilduff, partner with Again Capital LLC.
"At the same time, those cuts are going to come because the economy is slowing and that impacts oil demand."
Reports on consumer and producer prices earlier in February signalled sticky inflation and a guarded approach from Fed policymakers, which prompted investors to push back expectations of rate cuts to June from March.
Euro zone inflation dipped further this month, strengthening the case for the European Central Bank to start easing interest rates later this year, data from some of the region's biggest economies showed.
High interest rates have been used in many major Western economies to curb inflation, potentially reducing economic growth and oil demand.
On the supply side, crude inventories in the U.S., the world's top producer, have risen for a fifth consecutive week, increasing by 4.2 million barrels, official data showed on Wednesday, exceeding forecasts of a 2.7 million-barrel build. [EIA/S].
An extension to voluntary oil output cuts from the OPEC+ producer group was also on the table.
"With the demand outlook remaining uncertain, we think OPEC will extend the current supply agreement to the end of the second quarter," ANZ analysts said in a note.
A Reuters survey showed OPEC oil output likely rose by 90,000 bpd in February.
(Reporting by Laila Kearney in New York, Natalie Grover in London, Yuka Obayashi in Tokyo and Jeslyn Lerh in Singapore; Editing by David Goodman, Marguerita Choy and Andrea Ricci)
Did you find this insightful?
Bad
Just Okay
Amazing