SINGAPORE: Oil prices were little changed on Tuesday after rising in the previous session as investors were cautious ahead of U.S. consumer price data even as expected summer demand increases supported the market.
Brent futures for August settlement rose 5 cents to US$86.06 a barrel at 0440 GMT after gaining 0.9 per cent in trading on Monday.
U.S. crude futures for August delivery was up 6 cents to US$81.69 a barrel after climbing 1.1 per cent previously.
Both benchmarks rose about 3 per cent last week, marking two straight weeks of gains.
Gasoline demand is rising and oil and fuel stockpiles have declined as the U.S., the world's biggest oil consumer, enters the peak summer consumption period.
U.S. crude oil stockpiles are expected to have fallen by 3 million barrels in the week to June 21, a preliminary Reuters poll showed on Monday. Gasoline stocks were also expected to have declined, while distillate inventories likely rose last week.
"The surge in oil prices was triggered by an optimistic demand outlook and reduced U.S. inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months," said independent market analyst Tina Teng.
Still, investors are cautious about further oil price increases on concerns that relatively higher interest rates will limit growth in fuel consumption by curtailing the economy.
With the U.S. Federal Reserve still focused on limiting inflation, the release of the personal consumption expenditures index, the Fed's preferred measure of price gains, on Friday will give more direction on rates.
Delays to an interest rate cut would keep the cost of borrowing higher for longer. "The PCE data from the U.S. is a focus this week as it will provide clues about the Fed's rate decision," added Teng.
Oil was also supported by continued Ukrainian attacks on Russian oil infrastructure that could cut crude and fuel supply.
Most recently, on June 21, Ukrainian drones hit four refineries, including the Ilsky refinery, one of the main fuel producers in southern Russia.
The European Union adopted a package of sanctions against Russia over its war in Ukraine that will see 27 vessels, including ones run by Russian state-owned shipping firm Sovcomflot, added to its list of sanctioned entities.
"Adding to this, the market remains on edge ahead of elections in Iran later this week. A more hard-line president could result in more direct confrontations with the U.S., Israel and Saudi Arabia," said ANZ Research analysts in a note.