Oil prices fall slightly as markets weigh demand expectations, supply outlook By Investing.com

Investing.com– Oil prices fell in Asian trade on Tuesday, extending losses from the previous session as weak U.S. and European economic data fueled some questions about the outlook for demand.

But prices remained near near three-month highs, buoyed by bets that cold spells in the US and Europe will help boost near-term demand.

Hopes of additional stimulus measures from China, the largest oil importer, also continued to weigh on prices, with the focus on upcoming inflation data from that country this week.

which expires in March was down 0.3% at $76.08 a barrel, while it was down 0.4% at $72.65 a barrel by 20:05 ET (01:05 GMT).

Weak economic data is fueling demand fears

Weaker-than-expected U.S. data for December raised concerns that business activity in the world’s biggest fuel consumer is slowing, portending a softer outlook for demand. Durable goods and factory orders data also read softer than expected.

In Europe, the German index for December read stronger than expected, heralding more pressure on the eurozone economy, while PMI data presented a mixed picture of business activity in the bloc.

The readings come just ahead of a series of key inflation and labor market prints from the US and the eurozone this week, which are likely to weigh on the economic outlook.

The dollar was also bullish ahead of Friday’s key data, again weighing on oil prices. While the dollar initially fell after reports that President-elect Donald Trump would adopt a less strict tariff policy than initially signaled, it recovered most of its losses after Trump denied the report.

The polar vortex is fueling hopes of a short-term increase in oil demand

But losses in oil prices were capped by bets that bitterly cold weather in the US and Europe would boost demand for oil, especially distillates used for heating.

The polar vortex is expected to cause snow storms in parts of the US, while temperatures will also drop in Europe.

Elsewhere, expectations of an improvement in demand were also boosted by Saudi Aramco, the world’s biggest oil exporter, which raised prices to Asian buyers in February, its first price jump in three months.

On the other hand, Sudan lifted the nearly year-long suspension of oil transport from South Sudan to the port on the Red Sea, due to improved security conditions.