Investing.com — Oil prices fell in Asian trading on Tuesday, extending losses from the previous session as weak US and European economic data raised some questions about the demand outlook.
But prices remained close to their highest level in nearly three months, supported by bets that a cold snap in the United States and Europe will help boost demand in the near term.
Hopes for further stimulus measures in China, the largest oil importer, also continued to weigh on prices, with focus shifting to inflation data coming out of the country this week.
Futures contracts expiring in March fell 0.3% to $76.08 per barrel, while they were down 0.4% to $72.65 per barrel by 20:05 ET (01:05 GMT).
Weak economic data raises demand concerns
Lower-than-expected US data for December raised concerns about a decline in business activity in the world's largest fuel consumer, presenting a weaker outlook for demand. Durable goods and factory orders data were also weaker than expected.
In Europe, Germany's December reading was stronger than expected, heralding further pressure on the euro zone economy, while PMI data presented a mixed picture of business activity in the bloc.
The readings come ahead of a series of key inflation and labor market data from the US and the euro zone this week, which are likely to factor into the economic outlook.
The dollar was also optimistic ahead of key data scheduled for Friday, which in turn put pressure on oil prices. While the dollar initially fell on a report that incoming President Donald Trump would adopt a less stringent tariff policy than he initially indicated, it regained the bulk of its losses after Trump denied the report.
The polar vortex stimulates hopes of boosting oil demand in the near term
But losses in oil prices were limited by bets that very cold weather in the United States and Europe will drive demand for oil, especially distillates used for heating purposes.
The polar vortex is expected to cause snowstorms across large swaths of the United States, with temperatures also falling in Europe.
Elsewhere, expectations of improving demand were also boosted by Saudi Aramco – the world's largest oil exporter – raising prices for Asian buyers in February – the first price increase in three months.
On the other hand, Sudan lifted a nearly year-long moratorium on transporting oil from South Sudan to a port on the Red Sea, amid improved security conditions.
