Oil Rises as US Inflation Drop Reduces Demand Concerns
Oil prices rose on Friday as a slowdown in inflation in the US eased concerns about the Federal Reserve’s future rate hikes, while China’s Covid-19 policy continued to cloud the demand outlook in the world’s second-largest oil consumer.
International benchmark Brent crude traded at $95.72 per barrel, representing a 2.18% increase from the closing price of $93.67 a barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $88.38 per barrel at the same time, a 2.21% gain after the previous session closed at $86.47 a barrel.
Prices gained momentum after better-than-expected inflation data in the US, raising hopes for an improvement in the world’s largest oil-consuming country.
The consumer price index (CPI), which measures changes in the prices of goods and services from a consumer’s perspective, came in at 7.7% in October, easing from the 8.2% annual gain in September, according to Labor Department figures.
The slowdown in inflation reassured investors that the Fed could take its foot off the throttle in increasing interest rates in the coming months.
However, data from the Energy Information Administration (EIA) signalled a decline in demand as US commercial crude oil inventories rose by around 3.9 million barrels to 440.8 million barrels, against the market expectation of an increase of around 1.1 million barrels.
However, the outlook for demand in China remains hazy, despite the government’s relaxation of some pandemic restrictions. READ:Bond Yield Rises, T-Bills Sees Buying Interest as Naira Falls
China loosened some of its strict COVID regulations, including the two-day quarantines for visitors and close contact of sick people, as well as fines for airlines that brought in an excessive number of cases.
Meanwhile, as the EU prepares to impose sanctions on Russian oil exports on Dec. 5 in response to Russia’s attack on Ukraine, supply issues have supported price rises.
# Oil Rises as US Inflation Drop Reduces Demand Concerns#