Oil prices ticked up on Tuesday as investors played cautious ahead of key interest rate decisions and inflation data releases, but concerns over supply surplus and slower demand growth kept a lid on gains.

Brent crude futures for February were up 26 cents, or 0.3 percent, to $76.29 a barrel as of 0342 GMT, while US West Texas Intermediate crude futures for January delivery gained also gained 26 cents, or 0.4 percent, at $71.58 a barrel.

"All attention will be on the US CPI data today to potentially set the tone for US policymakers at their upcoming meeting," said Yeap Jun Rong, market analyst at IG, in a note.

The US Consumer Price Index (CPI) report is due on Tuesday, while the Federal Open Markets Committee's (FOMC) two-day monetary policy meeting will end on Wednesday.

The US Federal Reserve is widely expected to hold rates steady on Wednesday, but the November Fed minutes showed that policymakers were still concerned that inflation could be stubborn, leaving the door open for additional tightening if needed.

"Further inflation progress will be on watch to validate the effectiveness of current restrictive policies in place and give more room for the Federal Reserve (Fed) to consider rate cuts in 2024 if economic conditions worsen," said Yeap.

Also providing a lift to oil prices, a cruise missile launched from Houthi-controlled Yemen struck a commercial chemical tanker, causing a fire and damage but no casualties, two US defence officials told Reuters on Monday.

The strike is one of the latest attacks by the Iran-aligned Houthis against ships in the Red Sea, escalating geopolitical tension in the region and heightening safety risks for tankers in vital shipping lanes.

Meanwhile, oil investors remain sceptical that total supply will drop after the OPEC+ group pledged to cut 2.2 million barrels per day (bpd) for the first quarter of 2024, as output growth in non-OPEC countries is expected to lead to excess supply next year.

The voluntary cut may not be long enough, analysts and traders said, as crude oil physical and futures prices show increasing signs of surplus ahead of their implementation.

"Growth at US shale oil operations continues to surprise on the upside, while gains across other non-OPEC producers have been unexpectedly large," said ANZ Research analysts in a note.

Both WTI and Brent are in a contango market structure, when prompt contracts are less than later-dated contracts, for first several months of 2024. That indicates investors feel there is lower demand for crude or adequate supply for those months.

"The market should get a fresh take on fundamentals when OPEC and the International Energy Agency release their monthly oil market reports this week. The oil market is also watching negotiations at COP28," said ANZ analysts.

A coalition of more than 100 countries had been pushing for an agreement that would for the first time promise an eventual end to the oil age, but are up against opposition from OPEC members.