Oil prices traded up Tuesday on bargain hunting, recovering some ground from the previous day's plunge, but gains were limited as investors remained cautious.
Both benchmarks fell around $3 a barrel on Monday after analysts highlightedand concerns about demand growth just ahead of key inflation data and a two-day Fed monetary policy meeting concluding on Wednesday.
"Some investors looked for bargains after the previous day's heavy selling while others held back their positions with speculation that Saudi Arabia may cut production additionally," said Tatsufumi Okoshi, a senior economist at Nomura Securities. Oil prices could fall further because of China's faltering economic recovery, he added, predicting WTI would trade in the range of $62.50 to $75 a barrel during the summer, but mainly below $70 a barrel.at its policy meeting. The Fed's rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.
The European Central Bank is expected to hike interest rates by another quarter percentage point on Thursday to tame stubborn inflation. But the Bank of Japan, which will announce its plan on Friday, is expected to maintain its ultra-loose policy.
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