Brent crude oil increased by $2.69 to settle at $80.68 per barrel on Tuesday after data pointed to slowing inflation in the United States.
Also, the US West Texas Intermediate (WTI) crude futures improved by $2.22 or 3 per cent during the session to quote at $75.39 per barrel.
US prices rose less than expected in November, the latest sign that the runaway inflation that has been gripping the economy is beginning to loosen up.
The consumer price index, which measures a wide basket of goods and services, rose just 0.1 per cent from the previous month and increased 7.1 per cent from a year ago, the country’s Labor Department reported Tuesday.
The increase from a year ago, while well above the Federal Reserve’s 2 per cent target for a healthy inflation level, was tied for the lowest since November 2021.
The market was also buoyed by concerns about supply disruptions, including the ongoing shutdown of the Canada-to-United States Keystone crude pipeline following a massive leak last week.
Traders worried about how long it would take to clean up and restart the Keystone oil pipeline after more than 14,000 barrels of oil leaked last week, the largest US crude oil spill in nearly a decade.
The company shut the pipeline after the spill was discovered last Wednesday in Kansas, and since the affected segment of the line cannot resume operation until regulators approve a restart plan in its entirety, prices jumped.
The outage is expected to shrink supplies at the Cushing, Oklahoma storage hub and delivery point for benchmark US crude oil futures.
Support also came after the Dollar index plunged on Tuesday due to the inflation figures. A weaker Dollar makes oil cheaper for holders of other currencies, which can boost demand.
This reinforces expectations the US Federal Reserve will slow the pace of rate increases after its two-day meeting on Wednesday.
The greenback fell to a six-month low against the euro after the data. The Euro hit $1.0673, the highest since June, and was last up 0.9 per cent at $1.0631.
However, demand worries remain as the Organisation of the Petroleum Exporting Countries (OPEC) on Tuesday trimmed its first-quarter absolute oil demand forecast and said the global economic slowdown is becoming evident.
Also, Chinese leaders reportedly delayed a key economic policy meeting due to surging COVID-19 infections, adding to concerns about demand recovery in the world’s biggest crude importer.
