Oil loses its highest levels in 2023...and the price movement is in the hands of separator data

Oil prices fell slightly on Thursday, retreating from multi-month highs as traders began to remain cautious ahead of key US inflation data due later in the day, while concerns about slowing demand from China remained valid.

Dollar strength, ahead of Thursday's CPI reading, was the biggest hurdle to higher oil prices, as markets bet on an uptick in inflation in the US.

Oil prices now

However, crude oil prices are still trading near their highest levels for this year, as data showed that demand for fuel in the US remained strong.

A sideways movement of oil was recorded at exactly 11:45 Riyadh time, as Texas oil contracts traded at $84.5 a barrel, up by 0.12%, and Brent oil contracts rose by 0.18%, to $87.71 a barrel.

Markets await US CPI data

Sentiment is very nervous ahead of key US CPI data due later today.

Markets were also on alert as analysts expected a stronger reading for July, which could indicate that inflation has remained flat and well above the Fed's annual target range of 2%.

High inflation is expected to provide more impetus for the Fed to maintain its hawkish stance - a scenario that could affect economic activity in the remainder of the year, potentially hurting oil demand.

The prospect of higher interest rates has also boosted the dollar in recent weeks, while a stronger dollar is making oil more expensive for international buyers.

Lower supplies and strong fuel demand in the US are supporting oil prices

Data released on Wednesday showed that US inventories grew unexpectedly in the week ending August 4th, as well as a much larger-than-expected drawdown in fuel and distillate inventories.

The reading showed that fuel demand in the world's largest fuel consumer remained strong despite high interest rates and inflation.

The reading also spurred hopes of further tightening in global oil markets in the coming months, following an extension of supply cuts by Saudi Arabia and Russia.

The recovery of Chinese demand is in question after the weak data

A series of weak economic readings from China raised concerns about a recovery in demand in the world's largest oil importer. China's oil imports also fell to their second lowest level this year in July. But Beijing is now expected to implement more stimulus measures in the coming months, which could help boost economic activity and demand for oil in the country.