Investing.com– Oil prices drifted lower in Asian trade on Tuesday, extending losses from the prior session as soft U.S. and European economic data raised some questions over the demand outlook.
But prices remained close to a near three-month high, buoyed by bets that a cold snap across the U.S. and Europe will help increase near-term demand.
Hopes of more stimulus measures in top oil importer China also continued to factor into prices, with focus turning to upcoming inflation data from the country this week.
expiring in March fell 0.3% to $76.08 a barrel, while fell 0.4% to $72.65 a barrel by 20:05 ET (01:05 GMT).
Weak economic data spurs demand fears
Softer-than-expected U.S. data for December raised concerns that business activity in the world’s biggest fuel consumer was easing, presenting a softer outlook for demand. Durable goods and factory orders data also read softer than expected.
In Europe, German read stronger than expected for December, heralding more pressure on the euro zone economy, while PMI data presented a mixed picture of business activity in the bloc.
The readings come just before a slew of key inflation and labor market prints from the U.S. and euro zone this week, which are likely to factor into the economic outlook.
The dollar was also upbeat before key data due on Friday, which in turn pressured oil prices. While the greenback had initially plummeted on a report that incoming President Donald Trump will adopt a less strict tariff policy than initially signaled, it recouped a bulk of its losses after Trump denied the report.
Polar vortex spurs hopes of near-term oil demand boost
But losses in oil prices were limited by bets that severely cold weather in the U.S. and Europe will push up demand for oil, especially distillates used for heating purposes.
A polar vortex is set to cause snowstorms across swathes of the U.S., while also dropping temperatures in Europe.
Elsewhere, expectations of improving demand were also spurred by Saudi Aramco- the world’s biggest oil exporter- raising prices for Asian buyers in February- its first price hike in three months.
On the other hand, Sudan lifted a nearly year-long halt on the transport of oil from South Sudan to a port on the Red Sea, amid improving security conditions.
