Wall Street ends lower after midterm election, CPI in focus

Nov 9 (Reuters) – Wall Street ended sharply lower on Wednesday as Republican gains in midterm elections appeared more modest than some expected, with investors also focusing on upcoming inflation data that will provide clues about the severity of future interest rate hikes.

Republicans were still favored to win control of the House of Representatives but key races were too close to call, with a better-than-expected showing by Democrats diminishing the prospect of a so-called red wave of Republican gains.

“What was really more expected in the market was a red wave,” said Jay Hatfield, CEO of Infrastructure Capital Management in New York. “I think we were in a unique situation where the more the Republicans won, the better off the market would have been. At least there would have been some stocks strongly rallying, like defense and energy stocks.”

Also hurting sentiment, Walt Disney Co DIS.N tumbled 13% – its biggest one-day drop since 2001 – after the entertainment heavyweight reported more losses from its push into streaming video.

Tesla Inc dropped 7.2% to a two-year low after Chief Executive Elon Musk late on Tuesday disclosed that he sold USD 3.95 billion worth of shares in the electric-vehicle maker days after he closed the USD 44 billion deal for Twitter Inc.

Clean energy shares, which typically benefit under a Democratic leadership, rose, with the Invesco Solar ETF up almost 1%.

Wednesday’s drop on Wall Street ended a three-day rally in which the S&P 500 had gained almost 3%.

With the election outcome still uncertain, investors were turning their attention to October inflation data due out on Thursday, which could shed more light on whether the Fed might soften its aggressive stance on interest rate hikes.

“CPI is one of the more important inputs in terms of the inflation environment. You’d be hard-pressed to find many investors that want to make a big bet in front of (the report),” said Art Hogan, chief market strategist at B. Riley Financial.

Major indexes added to declines as Treasury yields climbed further after a poor auction of 10-year notes by the U.S. Treasury. Treasury yields reversed and fell later in the day.

Traders are split over whether the Fed will raise rates by 50 basis points or 75 basis points in December, according to CME Group’s Fedwatch tool.

The S&P 500 declined 2.08% to end the session at 3,748.58 points.

The Nasdaq declined 2.48% to 10,353.18 points, while the Dow Jones Industrial Average declined 1.95% to 32,513.94 points.

Investors also fretted about the health of major cryptocurrency exchange FTX after a deal to buy it collapsed as bigger rival Binance said it was pulling out.

Meta Platforms Inc jumped about 5% after the Facebook parent said it was cutting 13% of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year.

Wendy’s Co rallied 3% after the hamburger chain reported quarterly sales and profit that beat analysts’ estimates.

Declining stocks outnumbered rising ones within the S&P 500 by a 11.9-to-one ratio.

The S&P 500 posted 10 new highs and 16 new lows; the Nasdaq recorded 69 new highs and 463 new lows.

Volume on US exchanges was relatively light, with 11.6 billion shares traded, compared with an average of 11.8 billion shares over the previous 20 sessions.

(Reporting by Noel Randewich in Oakland, Calif.
Additional reporting by Devik Jain, Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru
Editing by Arun Koyyur and Matthew Lewis)

Dollar higher as investors look past US midterms to inflation data

NEW YORK, Nov 9 (Reuters) – The dollar advanced against most major currencies on Wednesday, as results so far for the US midterm elections showed little evidence of a “red wave” resounding Republican victory that some expected, leaving investors to focus on upcoming inflation data.

Republicans made modest gains in the midterms but Democrats performed better than expected, as control of the Senate hinged on three races that remained too close to call.

A stronger showing by Republicans may have backed the idea of less fiscal support and potentially a lower peak in the Fed’s terminal rate, which would have been dollar negative, said Joe Manimbo, senior market analyst at Convera in Washington.

“Markets are now in the process of turning the page on politics and bracing for the inflation report tomorrow,” Manimbo said.

Investors are waiting to see whether Thursday’s US Consumer Price Index data will spur the Federal Reserve to continue to increase interest rates well into next year in a bid to curtail inflation, or whether they might be able to ease policy tightening.

The dollar has retreated from multi-decade highs in recent weeks as investors take profits following a months-long rally and as speculation grows that the Fed may be inching closer to pulling the curtain on its dollar-supporting interest rate hikes.

“The inflation report could be a good litmus test to gauge whether dollar sentiment has materially softened,” Manimbo said.

The euro was 0.7% lower against the dollar at $1, while the greenback was up 0.7% against the yen.

Still the outlook for the dollar was less than rosy.

“Despite today’s pop higher in the USD, broader trends remain soft and we still feel the USD bull cycle is maturing and that the currency is prone to more weakness ahead,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

Sterling fell 1.73% against the dollar to USD 1.1337, on pace to snap a three-day winning streak as investors fretted over the currency’s inability to breach the USD 1.16 level the day before. Investors remain on edge ahead to British finance minister Jeremy Hunt’s planned fiscal statement on Nov. 17, with indications there will be a squeeze on public spending and potentially higher taxes.

On Wednesday, the dollar was also supported by a bout of risk aversion ahead of Thursday’s inflation report and a second day of weakness in cryptocurrencies as investors continued to fret about the stability of the sector and the financial health of major exchange FTX despite plans for a rescue deal from bigger rival Binnacle.

FTX’s native token was down 43% at a more than two-year low of USD 3.112, while bitcoin was 10.13% lower at USD 16,809.83, just off the two-year low of 16,452.98 touched earlier in the session.

(Reporting by Saqib Iqbal Ahmed; Editing by Alex Richardson)

Oil prices plunge 3% on US inventory build, China COVID worries

NEW YORK, Nov 9 (Reuters) – Oil prices sank by roughly USD 3 a barrel on Wednesday after industry data showed that US crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand.

Brent crude futures settled at USD 92.65 a barrel, shedding USD 2.71, or 2.8%, while US West Texas Intermediate (WTI) crude futures settled at USD 85.83 a barrel, dropping USD 3.08, 3.5%. The benchmarks fell around 3% on Tuesday.

US crude in storage jumped by 3.9 million barrels last week to 440.8 million barrels as oil production increased to about 12.1 million barrels a day, US Energy Information Administration data showed. Analysts in a Reuters poll had expected a stockpile rise of 1.4 million barrels.

“The report was once again mixed but tilted towards bearish, with the crude oil build and the jump in domestic production,” said John Kilduff, partner at Again Capital LLC in New York.

US gasoline stocks were down by 900,000 barrels in the week to 205.7 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a drop of 1.1 million barrels. Distillate stockpiles, which include diesel and heating oil, fell by about 500,000 barrels, a smaller-than-expected decline.

“Adding to downside pressure is the continued concerns over the future Chinese economic growth path that could prompt adjustment of global oil demand views,” Jim Ritterbusch, of Ritterbusch and Associates, said in a note.

Last week, the market had latched onto hopes that China might be moving toward relaxing COVID-19 restrictions, but over the weekend health officials said they would stick to their “dynamic-clearing” approach to new infections.

COVID-19 cases in Guangzhou and other Chinese cities have surged, with millions of residents of the global manufacturing hub being required to have COVID-19 tests on Wednesday.

“With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming US demand, the recessionary crews are back out in full force this morning in Asia,” Stephen Innes, managing partner at SPI Asset Management, said in a note.

A stronger US dollar, which makes oil more expensive for buyers in other currencies, also weighed on crude prices. The dollar advanced against several major currencies as results so far for the U. midterm elections on Tuesday dispelled notions of a resounding Republican victory.

Meanwhile, supply concerns remain.

The European Union will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5, in retaliation for Russia’s invasion of Ukraine.

(Additional reporting by Noah Browning in London, Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Paul Simao, Bernadette Baum and Josie Kao)

China’s factory gate prices suffer first drop since Dec 2020 as COVID curbs take toll

BEIJING, Nov 9 (Reuters) – China’s factory gate prices for October dropped for the first time since December 2020, and consumer inflation moderated, underlining faltering domestic demand as strict COVID curbs, a property slump and global recession risks hammered the economy.

Analysts say the struggles for businesses and consumers both at home and abroad will heap deflationary pressure on China over coming months, with aggressive global interest rate increases and the Ukraine war adding to Beijing’s challenge.

The producer price index (PPI) fell 1.3% year-on-year, reversing from a 0.9% gain a month earlier, National Bureau of Statistics (NBS) data showed on Wednesday, and compared with a forecast of a 1.5% contraction in a Reuters poll.

The consumer inflation also moderated from a 29-month high in September, and underlying price pressures remained much more modest with core inflation rising 0.6% in October, unchanged from September.

“Adverse factors like weak domestic demand and softening export will make China wary of a slide into deflation, signalled by its moderate core-CPI reading of below 1.5% growth for more than two years,” said Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc.

The deflationary impulse in the producer price gauge partly reflected the sharply higher year-ago levels and falling commodity prices, according to an accompanying NBS statement.

Prices in coal mining and washing industry were down 16.5%, deepening from a 2.7% drop in the previous month, while those in ferrous metal smelting and rolling processing slumped 21.1% after declining 18.0% in September.

The world’s second-largest economy has been hobbled this year by a recurrence of COVID-19 outbreaks, forcing authorities to implement strict anti-virus curbs in a blow to factory and consumer activity.

China’s trade engine has also taken a hit, with exports and imports shrinking in October, and economists are warning of further weakness over the coming quarters due to pressure at home and global recession risks.

“The sharp divergence between PPI inflation in China and other industrial countries means China may be gaining some competitive advantage in manufacturing that could help bolster China’s exports,” Nomura analysts said in a note to clients.

“However, the worsening of global growth is denting external demand.”

POLICY CHALLENGE

The consumer price index climbed 2.1% from a year earlier, easing from a 29-month high of a 2.8% increase in September, mainly driven by falling food prices. It was also slower than the 2.4% forecast by analysts.

Food prices rose 7.0% in annual terms, slowing from 8.8% rise in the previous month, with fresh vegetable prices off 8.1% from a 12.1% rise in September.

However, Pork prices – a key driver of the CPI – rose 51.8% year-on-year in October, faster than 36% growth in September.

Almost three years into the pandemic, China has pledged to press on with its strict COVID-19 containment strategy. Analysts say policymakers will be cautious in easing monetary policy for fear of capital flight amid sweeping global interest rate hikes, led by the Federal Reserve.

China’s yuan currency has already been pummelled this year by the global tightening trend and a buoyant US dollar, effectively crimping headroom for any sizable policy action by the People’s Bank of China.

“The upshot is that inflation is unlikely to become a major policy constraint in China,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“That said, there are currently other barriers to monetary easing, such as the PBOC’s efforts to slow the renminbi’s depreciation against the US dollar.”

The International Monetary Fund last month said it expects China’s growth to slow to 3.2% this year, a 1.2-point downgrade from its April projection, on expectations of a gradual lift of strict COVID-19 curbs next year but no quick resolution to the real estate crisis.

(Reporting by Liangping Gao and Liz Lee; Editing by Shri Navaratnam)

Investors brace for government gridlock as Republicans seen gaining in US midterms

NEW YORK, Nov 8 (Reuters) – Investors are expecting Republican gains in US midterm elections, a result that will likely scale back Democratic spending and regulation but set up a bruising fight over raising the US debt ceiling next year.

Republicans are favored to win control of the House of Representatives and possibly the Senate, polls and betting markets show, though there are still hours left to vote in many districts. With Democratic President Joe Biden in the White House, that result would lead to a split government, an outcome that has been accompanied by positive long-term stock market performance in the past.

While macroeconomic concerns and Federal Reserve monetary policy have been the market’s key movers this year, Capitol Hill politics could exert its own influence on asset prices.

A Republican win would cut down on fiscal spending that could exacerbate already-high inflation and lead the Fed to raise interest rates even higher than expected, analysts at Morgan Stanley wrote earlier this week, potentially buoying the stock market’s most recent rebound while supporting Treasury prices and helping curb the burgeoning dollar.

“I think the markets are rallying at the prospect of gridlock,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. “Fiscal spending has created a challenge for central banks worldwide. The prospect of no legislation is a bullish inflation signal.”

Historically, stocks have tended to do better under a split government when a Democrat is in the White House, with investors attributing some of that performance to political gridlock that prevents either side from making major policy changes.

Average annual S&P 500 returns have been 14% in a split Congress and 13% in a Republican-held Congress under a Democratic president, according to data since 1932 analyzed by RBC Capital Markets. That compares with 10% when Democrats controlled the presidency and Congress.

“If we get a split Congress, we might have to adjust our portfolios to be less defensive than we are today,” said Brooks Ritchey, Co-CIO at K2 Advisors.

The S&P 500, which finished up 0.6% on Tuesday, has risen about 5% over the last month. The index is down about 20% for the year.

Over the longer term, however, a split government could lead to heightened tensions over raising the federal debt ceiling in 2023, setting up the kind of protracted battle that led Standard & Poor’s to downgrade the US credit rating for the first time in 2011, sending financial markets reeling.

“If the Republicans really gain some power here, in the House and Senate, they can make (raising the federal debt ceiling) a really difficult process,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

With US equity options market positioned for relative calm, a surprisingly strong showing by the Democrats could throw the markets for a loop.

Options positioning on Monday implied a decline of 1.5% in the S&P 500 on the day after the vote should Democrats pull off a stronger-than-expected showing, according to Tom Borgen-Davis, head of equity research at options market making firm Optiver.

PERFECT TRACK RECORD

Many strategists are also quick to cite the stock market’s perfect post-midterms track record: The S&P 500 has posted a gain in each 12-month period after the midterm vote for 19 straight occasions since World War Two, according to Deutsche Bank.

Still, some investors cautioned against expecting a repeat this time around, when there is little clarity on how quickly the Fed will be able to tame inflation or end its market-bruising monetary tightening.

One important potential catalyst comes Thursday in the form of the US consumer price report, a data point that has spurred sharp market moves throughout 2022.

“Next year’s earnings estimates are still too high, Fed policy is still tight and tightening, inflation is still too high,” said James Athey, investment director at Abrdn. “This is all bad news for equities.”

(Reporting by Saqib Iqbal Ahmed, Carolina Mandl and Laura Matthews; Editing by Ira Iosebashvili and Jonathan Oatis)

Oil prices slide USD 2 on China demand worries, US midterm elections

Nov 8 (Reuters) – Oil prices fell more than USD 2 on Tuesday in choppy trading on growing worries about fuel demand as COVID-19 outbreaks worsened in top crude importer China, and jitters about the outcome of US midterm elections.

Brent futures for January delivery fell USD 2.56 to USD 95.36 a barrel, a 2.6% loss. US crude fell USD 2.88, or 3.14%, to USD 88.91 per barrel.

“The market is entering today with a certain degree of skepticism surrounding the election… It’s a wait to see what the result is type of a situation here,” said Bob Yawger, director of energy futures at Mizuho in New York.

US stocks also gyrated as market participants bided their time waiting to see whether Capitol Hill is in for a power shift, with Republican gains expected in the midterm elections.

On Monday, both benchmarks hit their highest since August on reports that leaders in China were weighing an exit from the country’s strict COVID-19 restrictions.

But new cases have surged in Guangzhou and other Chinese cities, dimming prospects for fewer restrictions.

“Rising COVID cases in China is on most traders’ radars this morning, as the “on again/off again” news of lockdowns continues,” said Dennis Kissler, senior vice president of trading at BOK Financial.

Gasoline and diesel supplies remain uncomfortably low, he added, limiting the downside for crude prices as most of the United States braces for major cold weather.

US inventories of distillate fuels finished October at their lowest levels for any October since 1951, according to the US Energy Information Administration.

The ICE exchange, home to the Brent benchmark, has increased the initial margin rates for front-month Brent crude futures by 4.92%, making maintaining a futures position more expensive from the close of business on Tuesday.

Market participants, worried high inflation and rising interest rates could spark a global recession, will also watch US consumer price data on Thursday.

The EIA on Tuesday cut its US energy demand outlook for 2023 and forecast US production for next year would be 21% lower than it previously expected.

Oil producer Diamondback Energy also warned that the US shale industry will continue to struggle to expand production at its current pace, with costs of new shale wells likely rising.

US crude stocks rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, much higher than the expected 1.1 million barrel rise.

The Energy Information Administration will release its own data at 10:30 a.m. EST (1530 GMT) on Wednesday.

The European Union ban on Russian oil, imposed in retaliation for Russia’s invasion of Ukraine, is set to start on Dec. 5 and will be followed by a halt on oil product imports in February. Moscow calls its actions in Ukraine “a special operation.”

(Reporting by Shadia Nasralla; Additional reporting by Isabel Kua; Editing by David Gregorio, Andrea Ricci and Lincoln Feast)

Wall Street ends higher as investors eye US midterms

Nov 8 (Reuters) – Wall Street ended higher on Tuesday during voting in midterm elections that will determine control of the US Congress, with investors betting on a political stalemate that could prevent major policy changes.

It was the third straight day of gains on the US stock market, leaving the Dow Jones Industrial Average down less than 10% year-to-date.

Helping the blue-chip Dow, shares of drugmaker Amgen Inc rallied to a record high after the company reported positive data related to its cholesterol drug and obesity treatment.

All 435 House of Representative seats and some 35 seats in the Senate are on the ballot, with experts saying there may be days of waiting before it is clear who won certain races. Nonpartisan forecasts and opinion polls suggested a strong chance of Republicans winning a House majority and a tight race for Senate control.

“On balance, financial markets like gridlock. To the extent that change will be slow and evolving, a divided government of course provides that backdrop,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.

A surprise victory for Democrats, however, could raise concerns about tech-sector regulation as well as budget spending that could add to already-high inflation, according to market strategists.

Investors are also awaiting a key inflation reading due on Thursday, which is expected to show easing in consumer prices and provide further clues on whether the US Federal Reserve could soften its campaign of aggressive interest rate hikes.

Traders are divided about whether the Fed will raise rates by 50 basis points or 75 basis points at the central bank’s meeting in December, according to CME Fedwatch tool.

Cryptocurrency-related stocks including Coinbase Global and Microstrategy tumbled after Crypto giant Binance signed a nonbinding agreement to buy rival FTX’s non-US unit to help cover a “liquidity crunch” at the cryptocurrency exchange.

“Some investors will shoot first and ask questions later, but the good thing is crypto is kind of isolated. They are on their own, they really are not part of the equity market,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The S&P 500 is up about 7% from its October closing low, but it remains down about 20% in 2022 due to worries that the Fed’s aggressive rate hikes could cripple the US economy.

According to preliminary data, the S&P 500 gained 22.06 points, or 0.58%, to end at 3,828.86 points, while the Nasdaq Composite gained 51.85 points, or 0.49%, to 10,616.37. The Dow Jones Industrial Average rose 340.27 points, or 1.04%, to 33,167.27.

Take-Two Interactive Software Inc slumped after the videogame publisher lowered its annual sales outlook, while ride-hailing firm Lyft Inc tumbled after forecasting current-quarter revenue below Wall Street estimates.

(Reporting by Noel Randewich in Oakland, Calif., and David Carnevali in New York
Additional reporting by Amruta Khandekar, Sruthi Shankar, Devik Jain and Shubham Batra in Bengaluru
Editing by Maju Samuel and Matthew Lewis)

Asian stocks mixed as caution reigns ahead of US midterms

HONG KONG, Nov 8 (Reuters) – Asian shares held recent gains but lost momentum on Tuesday as investors remained cautious ahead of the release of the US inflation data and mid-term elections, which will determine control of Congress.

London and New York are set to open lower with FTSE futures and E-mini futures for the S&P 500 index down 0.55% and 0.18%, respectively, after Wall Street’s buoyant Monday close.

MSCI’s gauge of Asia Pacific stocks outside Japan narrowed gains to rise 0.12% at 0517 GMT.

“The thing to watch … will be the US midterms today and the CPI data tomorrow,” said Redmond Wong, Saxo Markets’ market strategist for Greater China, in a note on Tuesday.

“Markets are expecting the gridlock situation of a divided Congress and moderation in the US CPI. Both are helping the risk-on sentiments.”

Investors had recently placed bets on hopes that China would adjust its zero-COVID policy and reopen the economy soon but that rally proved unsustainable.

Hong Kong’s Hang Seng index .HSI and China’s benchmark CSI300 Index both dropped 1% in the afternoon sessions, wiping out morning gains.

Chinese health officials reiterated their commitment to the zero-COVID policy on Saturday at a press conference.

The policy has weighed on China’s economic activity, with downbeat trade data on Monday providing the latest sign that the world’s second-largest economy is slowing.

“Investors took note (of the fact) that the health officials added that local governments should not unreasonably double down on the implementation and must ensure people’s livelihood and economic activities remain normal,” Wong added.

Australia’s S&P/ASX 200 ended the day 0.36% higher, lifted by financial companies.

Japan’s Nikkei 225 gained as much as 1.44%, hitting an eight-week high, as investors scooped up chips and other technology stocks.

Overnight, the Dow Jones Industrial Average rose 1.31%, the S&P 500 gained 0.96% and the Nasdaq Composite advanced 0.85%.

Analysts said US mid-term elections on Tuesday could impact markets.

Control of the US House of Representatives is at stake in the midterms, with Republicans favoured by nonpartisan forecasters to win control.

“A divided government in Washington is ostensibly bullish for equities,” said Stephen Innes, managing partner of SPI Asset Management in a note.

“Gridlock cross-checks each party’s ‘worst impulses,’ and less activist fiscal policy is conducive to lower market volatility. That could be particularly helpful in 2022 and 2023 to the extent it calms rates volatility, the principal sponsor of this year’s historic cross-asset malaise,” he said.

Oil prices fell as recession concerns and worsening COVID-19 outbreaks in China sparked fears of lower fuel demand, outweighing supply worries.

Brent crude fell 0.32% to USD 97.61 a barrel by 0526 GMT, while US crude fell 0.38% to USD 91.44 a barrel.

Spot gold slipped 0.31% to USD 1,669.4 an ounce as the US dollar gained 0.163%.

(Reporting by Kane Wu; Editing by Ana Nicolaci da Costa and Sam Holmes)

Philippines raises USD 527 mln via 2027 T-bond re-issue

MANILA, Nov 8 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of re-issued 2027 T-bonds on Tuesday:

* BTr awards 30.64 billion pesos (USD 526.82 million) vs 35 billion pesos offer

* Avg yield 7.131%

* Tenders total 41.6 billion pesos

* Bonds were originally issued in 2007

(Reporting by Enrico Dela Cruz)

Oil prices slide as China demand, recession concerns outweigh supply woes

SINGAPORE, Nov 8 (Reuters) – Oil prices slipped on Tuesday as recession concerns and worsening COVID-19 outbreaks in China sparked fears of lower fuel demand, outweighing supply worries.

Brent crude fell 23 cents, or 0.2%, to USD 97.69 a barrel by 0726 GMT, while US West Texas Intermediate (WTI) crude fell 32 cents, or 0.4%, to USD 91.47 a barrel.

Both benchmarks hit their highest since August on Monday amid reports that leaders in China, the world’s top crude importer, were weighing an exit from the country’s strict COVID-19 restrictions.

However, Chinese health officials over the weekend reaffirmed China’s commitment to its strict zero-COVID policy. Also, recent data showed the country’s exports and imports unexpectedly contracted in October.

New coronavirus cases surged in Guangzhou and other Chinese cities, official data showed on Tuesday. The global manufacturing hub is fighting its worst flare-up ever, testing its ability to avoid a Shanghai-style lockdown.

“I think the rolling lockdowns, not to mention doubling down on zero-COVID over the weekend, are not only roiling the long-positioned oil market but they continue to push back the reopening narrative negatively for oil prices,” said Stephen Innes, managing partner at SPI Asset Management.

A firmer greenback also weighed on oil prices. Oil is generally priced in U.S. dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies.

Market participants will be eyeing the US CPI data this week for trading cues, CMC Markets analyst Tina Teng said.

“On the back of sticky inflation and rising interest rates in major western countries, oil futures are still pricing in the possibility of a global economic recession,” said Teng.

“This, along with a slowdown in China fuel demand, are reasons for the pull-back in oil futures prices in the past few months.”

But the near-term fundamentals for oil remain bullish, with the focus returning to supply issues, ANZ Research analysts said in a note.

“The market is facing the deadline for European imports of Russian oil before sanctions kick in,” ANZ added.

US crude oil stocks were expected to have risen by about 1.1 million barrels last week, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute due at 4:30 p.m. ET (2130 GMT) on Tuesday, and the Energy Information Administration due at 10:30 a.m. (1530 GMT) on Wednesday.

(Reporting by Isabel Kua; Editing by Himani Sarkar and Kenneth Maxwell)

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