By Arunima Kumar
(Reuters) -Oil prices fell slightly on Tuesday as optimism over demand faded, although tighter Russian and Iranian supply driven by expanding Western sanctions checked losses.
Brent futures were down 25 cents, or 0.33%, to $76.05 a barrel at 0950 GMT, while U.S. West Texas Intermediate (WTI) crude was down 44 cents, or 0.60%, to $73.12.
Both benchmarks slid on Monday, after rising for five days in a row last week to settle at their highest levels since October on Friday amid expectations of more fiscal stimulus to revitalise China’s faltering economy.
“This week’s weakness is likely due to a technical correction, as traders react to softer economic data globally that undermines the optimism seen earlier,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, referring to bearish economic news from the United States and Germany.
“Higher inflation in Germany raised suggestions that the ECB may not be able to cut rates as fast as hoped across the Eurozone, while U.S. manufactured good orders fell in November,” Ashley Kelty, an analyst at Panmure Liberum said.
Market participants are waiting for more data this week, such as the U.S. December non-farm payrolls report on Friday, for clues on U.S. interest rate policy and the oil demand outlook.
Meanwhile, cold weather in the U.S. and Europe has boosted heating oil demand, providing support for prices.
Meteorologists projected weather in the Lower 48 U.S. states would remain mostly colder than normal through Jan. 21, with the coldest days expected later this week.
Worries over tightening Russian and Iranian supply amid sanctions have also kept a floor under oil prices.
The uncertainty has translated into better demand for Middle Eastern oil, reflected in a hike in Saudi Arabia’s February oil prices to Asia, the first such increase in three months.
Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 31, the U.S. Commodity Futures Trading Commission said on Monday.
(Reporting by Colleen Howe in Beijing, Siyi Liu in Singapore and Arunima Kumar in Bengaluru. Editing by Sharon Singleton and Mark Potter)
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