Oil prices steadied on Tuesday as Chinese inflation data pointed to persistently weak demand but a softer dollar and hopes that the Federal Reserve might ease up on its policy tightening after a key U.S. inflation report this week provided support.

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Brent crude futures slipped 18 cents, or 0.2 percent, to $84 a barrel by 1102 GMT, while U.S. West Texas Intermediate futures eased 12 cents, or 0.1 percent, to $79.62 a barrel. Both benchmarks had risen nearly $1 in earlier trading.

Data from China showed consumer inflation in March rising at its slowest pace since September 2021, suggesting demand weakness persists amid an uneven economic recovery, which spurred some expectations that Beijing could take steps to boost growth.

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"China’s March CPI is lower than expected, which may promote the Chinese government to further stimulate the economy," said Tina Teng, an analyst at CMC Markets.

Crude futures also climbed as the dollar eased on hopes that the U.S. Federal Reserve is getting closer to ending its rate hike cycle. A weaker greenback makes oil cheaper for those holding other currencies.

"With more central banks pausing rate hikes, such as the Reserve Bank of Australia, Bank of Korea … the expectation for the Fed to further scale back its tightening policy has been strengthened," Teng added.

A U.S. inflation report to be released on Wednesday could help investors gauge the near-term trajectory for interest rates.

"The short-term crude demand outlook will soon be clearer. This week, we will find out if the U.S. economy is taking steps into the recession pool or if it is going to do a cannonball into it," said Edward Moya, senior analyst with OANDA.

"Wall Street should have a strong handle on the trajectory of the economy after it gets a pivotal inflation report."

Oil futures have climbed more than 5 percent since the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia surprised the market last week with a new round of production cuts starting in May.

On the U.S. supply front, industry data on U.S. crude stockpiles is due on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories fell by about 1.3 million barrels in the week to April 7.

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