“For market participants to start building up long positions again, they likely need to see larger inventory declines,” said UBS strategist Giovanni Staunovo, adding he expected this to happen within weeks.
Both benchmarks fell around $3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of a U.S. Fed monetary policy meeting concluding on Wednesday.
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The Fed’s rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on oil prices. So, a rate hike pause could be bullish.
The European Central Bank, meanwhile, is expected to hike interest rates on Thursday.
The Organization of Petroleum Exporting Countries (OPEC) kept its forecast for 2023 global oil demand growth steady for a fourth month on Tuesday, slightly increasing expectations of Chinese demand growth.
Another monthly report by the International Energy Agency (IEA) due on Wednesday will provide further trading cues.