DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Tuesday's session mixed, as traders await the weekly rundown of inventory data on U.S. crude and petroleum products supplies and a policy announcement from the Federal Open Market Committee that could signal earlier-than-expected tightening of quantitative easing programs amid rising inflation and persistent disruptions to global supply chains.

The International Monetary Fund warned Tuesday that global inflationary pressures tied to generous stimulus schemes across industrialized nations could prove more than just transitory, forcing central banks to tighten accommodative monetary policy earlier than expected. Federal Reserve Chairman Jerome Powell acknowledged earlier this month that rising inflation was uncomfortably above the levels the central bank was seeking, but resisted calls to change policy course, adding the economy is "still way off" from a full recovery.

The consumer price index jumped 0.9% in June and 5.4% from the same month last year, according to the Bureau of Labor Statistics. Excluding the volatile food and energy components, core CPI rose 4.5% from June 2020, the largest advance since November 1991.

"This particular inflation is just unique in history. We don't have another example of the last time we reopened a $20 trillion economy with lots of fiscal and monetary support," he said. "We are humble about what we understand."

Fed officials are set to accelerate discussions this week over how and when to gradually pare their purchases of $120 billion a month in Treasury and mortgage securities. The central bank will release an updated policy statement at 2 p.m. EDT Wednesday followed by a closely watched news conference by Fed Chair Powell. Increased scrutiny over the Fed's quantitative easing policy will undoubtedly emerge later this summer when Powell speaks again at the annual Jackson Hole Economic Policy Symposium in Wyoming, Aug. 26-28.

Despite rising inflation, IMF lifted U.S. gross domestic growth this year to 7% and 4.9% in 2022, up 0.6% and 1.4% respectively from forecasts made in April. The agency gave its biggest upgrade to the United Kingdom, boosting its 2021 growth projections by 1.7% to 7%, reflecting accelerated vaccinations. Eurozone received a smaller 0.2% upgrade for 2021, weighed down by tighter quarantine restrictions during the first half of the year. IMF lowered its economic forecast for Indonesia, Malaysia, Brazil, and Vietnam, where recent waves of COVID-19 infections are weighing on economic activity.

New coronavirus outbreaks across developing and emerging markets have forced factory and port shutdowns, further rattling global supply chains and aggravating shortages of key materials.

Domestically, U.S. crude oil stockpiles are expected to have decreased 2.2 million barrels (bbl) in the week ended July 23, with estimates ranging from a decline of 4.8 million bbl to an increase of 1 million bbl. Gasoline stockpiles are seen to have fallen 1 million bbl from the previous week, while stocks of distillates are expected to have been drawn down 400,000 bbl. Refinery runs likely rose by 0.3% to 91.7% of capacity last week.

The American Petroleum Institute will release weekly inventory data at 4:30 p.m. EDT.

On the session, NYMEX September West Texas Intermediate futures soften $0.26 to $71.65 bbl, and the international crude benchmark Brent contract for September delivery settled little changed at $74.48 bbl. NYMEX August RBOB contract added 0.58 cents to $2.3141 gallon and August ULSD futures declined 0.71 cents to $2.1439 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com