[SINGAPORE] Brent crude gave up most of its early gains and steadied above US$58.50 a barrel on Tuesday, supported by data showing annual consumer inflation in top energy consumer China recovered last month while a firmer dollar kept a lid on prices.
China, which is battling growing deflationary pressures, saw consumer inflation rise 1.4 per cent in February, beating the 0.9 per cent gain estimated by analysts. A slide in producer prices, however, underscored the deepening weakness in the economy. "The consumer price index figure is mildly positive" for oil prices, said Ric Spooner, chief market analyst at Sydney's CMC Markets. It means that demand in China was "a little bit better than expected", Mr Spooner added.
Brent was trading at US$58.56 by 0437 GMT, up 3 cents, after climbing to US$58.72 earlier in the day. It fell 4.6 per cent last week in its biggest decline since the week ended Jan 9.
US crude gained 13 cents at US$50.13, after finishing up around 1 per cent on Monday. The benchmark was underpinned by a report from market data firm Genscape that shows a modest stock build last week at the Cushing, Oklahoma delivery point, traders said.
Investors are now waiting for weekly US inventory reports from industry group the American Petroleum Institute and the US Department of Energy's Energy Information Administration this week for further price direction.
According to a Reuters survey, US crude stocks are set to extend their record build for a ninth week. "Brent and WTI continue to trend sideways, with WTI facing more volatility. Brent has been descending for the past few days and we believe that it is hovering near to a support level,"said Singapore's Phillip Futures in a research note on Tuesday.
A firm dollar, which rose to a fresh 11-1/2 year top on Tuesday against a basket of currencies, continued to check oil price gains as it makes commodities priced and traded in the greenback expensive for holders of other currencies.
The impact of the dollar on oil prices is more than that of the ongoing geopolitical tensions, analysts said.
Investors have priced geopolitical tensions in the Middle East into current oil prices, Mr Spooner said. "Middle East supply changes are always a wild card, but there is nothing on the clear horizon," Mr Spooner said.