Oil futures were edging higher on Tuesday after paring some gains in the morning trading, as investors weighed the global economic outlook after central banks for the world’s biggest economies signaled they would keep interest rates elevated for a long stretch to tame inflation, pushing the Treasury yields to their multi-year highs and boosting the allure of the greenback.
Expectations for a significant supply deficit moving into year-end alongside growing optimism over the potential for an economic soft landing as major central banks slowed or ended rate increases were cited for gains. Meanwhile, the ICE U.S. dollar index DXY on Tuesday jumped to its highest level since November 2022 as rising Treasury yields have kept the greenback well supported against its major peers.
The Energy Information Administration’s domestic production estimate is up 700,000 barrels a day since the end of May to 12.9 million barrels a day, shy of the record of 13.1 million barrels a day in March 2020, he noted, while 400,000 barrels a day of Iraqi Kurd barrels sent through the Turkish export facility at Ceyhan are expected to return to the market soon.