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HOUSTON: Crude oil futures climbed more than $1 a barrel on Tuesday, lifted by a temporary cut in US-China tariffs and a better than expected inflation report.

Brent crude futures rose $1.11, or 1.71%, to $66.07 a barrel by 1443 GMT. US West Texas Intermediate (WTI) crude was up 95 cents, or 1.53%, at $62.90.

The two benchmarks rose by about 4% or more in the previous session after the US and China agreed on sharp reductions to tariffs for at least 90 days, which also boosted Wall Street stocks and the dollar. “We didn’t participate as much as other markets did yesterday in the China boom, so we’re catching up today,” said John Kilduff, partner with Again Capital LLC. “Also the data this morning gives the Fed room to potentially begin making some moves.”

A US Labor Department report on Tuesday said inflation in April was 2.3%, the smallest year-over-year gain in four years, leading Wall Street firms like JP Morgan Chase and Barclays to cut forecasts of a US recession in the coming months.

The lower inflation number is expected to encourage the US Federal Reserve to keep interest rates unchanged in the short term, which would encourage consumer spending. Fears of the impact of tariffs lifting prices were expected to lead to an increase in rates charged by the US central bank for lending money.

The Organization of the Petroleum Exporting Countries and its allies, called OPEC+, are planning to boost oil exports in May and June, which is seen as possibly limiting oil’s upside.

OPEC has raised oil output by more than previously expected since April, with May output likely to increase by 411,000 barrels per day.

Meanwhile, sources told Reuters that Saudi Arabia’s crude oil supply to China will hold steady in June after hitting its highest level in more than a year in the previous month after an OPEC+ decision to increase output.

It is the second-largest crude supplier to China behind Russia. Elsewhere, signs broadly point to demand for refined fuel remaining strong. “Despite the deteriorating outlook for crude demand, positive signals from the fuel markets cannot be overlooked,” JP Morgan analysts said in a note. “Although international crude prices have declined by 22% since their peak on January 15, both refined product prices and refining margins have remained stable.”

Reduced refining capacity - mostly in the US and Europe - is tightening gasoline and diesel balances, increasing reliance on imports and raising susceptibility to price spikes during maintenance and unplanned outages, they added.

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