WASHINGTON (dpa-AFX) - Oil futures settled lower on Tuesday as data showing a bigger than expected increase in U.S. producer prices raised concerns that Federal Reserve will keep interest rates higher for a longer period.
Geopolitical tensions, and OPEC's Monthly Oil Market Report that reiterated its forecast for a 2.2-million barrel per day rise in oil demand in 2024, helped limit the downside in oil prices a bit.
Meanwhile, Canadian wildfires concerns persisted, posing a potential risk to oil and gas supplies. Ten new wildfires were reported on Monday, pushing the total number of active fires to 140 nationwide.
West Texas Intermediate Crude oil futures for June ended lower by $1.10 or about 1.4% at $78.02 a barrel, the lowest close in about two months.
Brent crude futures settled l0wer by about 1.1% at $82.42 a barrel.
The Labor Department said its producer price index for final demand climbed by 0.5% in April after a revised 0.1% dip in March. Economists had expected producer prices to rise by 0.3% compared to the 0.2% uptick originally reported for the previous month.
The report also said the annual rate of producer price growth accelerated to 2.2% in April from a downwardly revised 1.8% in March.
The year-over-year producer price growth was expected to inch up to 2.2% from the 2.1 percent originally reported for the previous month.
While the report initially generated renewed uncertainty about the outlook for interest rates, some economists pointed to the downward revisions to the March data as a positive sign.
Markets now look ahead to the International Energy Agency's monthly oil market report, and weekly inventory reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA).
The API's weekly report is due later today, while the EIA will release its inventory data Wednesday morning.
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