2023.01.3119:06:00UTC+00Oil Futures Settle Notably Higher

Crude oil futures rebounded from early weakness to settle on a firm note on Tuesday.

A firm dollar, and data showing an improvement in demand for crude and petroleum products in the U.S. in November helped lift oil prices higher.

Oil prices hovered around 3-week lows earlier in the day amid concerns about the outlook for energy demand and prospect of further interest rate hikes.

The Federal Reserve is widely expected to raise interest rate by 25 basis points amid signs of cooling inflation. The accompanying statement and post meeting comments from Fed Chief Jerome Powell are in focus for clarity on future rate hikes.

The Bank of England and the European Central Bank are also scheduled to announce their interest rate decisions this week. Both the BoE and the ECB are likely to raise their interest rates by 50 basis points.

The dollar index retreated to 102.03 after surging to 102.61.

West Texas International Crude oil futures for March ended higher by $0.97 or about 1.3% at $78.87 a barrel, recovering smartly from a low of $76.55 a barrel.

WTI crude futures shed about 1.7% in the month.

Brent crude futures were up $1.01 or 1.2% at $85.51 a barrel a little while ago.

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are set to meet virtually on Wednesday. It is very likely that the group will maintain production at current levels.

Weekly oil reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA) are in focus. The API's data is due later today, while EIA's inventory data is due Wednesday morning.