Latest News

Crude Oil Lower After CPI Jump; OPEC Remains Upbeat


© Reuters

By Peter Nurse — Oil prices weakened Thursday, as a strong U.S. inflation report boosted the dollar, but losses are limited following an upbeat view of global demand by OPEC. 

By 9:15 AM ET (1415 GMT), U.S. crude futures traded 0.1% lower at $89.57 a barrel, while the Brent contract fell 0.1% to $91.44.

U.S. Gasoline RBOB Futures were up 0.3% at $2.6612 a gallon.

The U.S. consumer price index gained 0.6% last month, up 7.5% on the year, the biggest year-on-year increase since February 1982.

This big jump could fuel speculation that the Federal Reserve will hike interest rates by 50 basis points in March, resulting in the dollar index climbing 0.5% to 95.927. A stronger dollar makes commodities prices in the greenback, including crude, more expensive for foreign buyers.

Still, losses are limited as the Organization of the Petroleum Exporting Countries said it expected world oil demand to rise by 4.15 million barrels a day this year in its monthly report earlier Thursday. 

While this was unchanged from its forecast last month, the cartel added there was upside potential to its forecast for world oil demand in 2022 as the global economy posts a strong recovery from the coronavirus pandemic.

“As most world economies are expected to grow stronger, the near-term prospects for world oil demand are certainly on the bright side,” OPEC said.

The market had received a boost Wednesday on an unexpected drop in U.S. crude stocks, suggesting demand has remained strong in the largest consumer of oil in the world. 

U.S. crude inventories fell 4.8 million barrels in the week to Feb. 4, according to the Energy Information Administration, dropping to the lowest levels since October 2018.

In addition, tensions remain high in Eastern Europe, with British Prime Minister Boris Johnson saying earlier Thursday that the West could face the “most dangerous moment” in its standoff with Moscow in the next few days, as Russia held military exercises in Belarus and the Black Sea following its troop buildup near Ukraine.

Elsewhere, traders continue to closely watch the nuclear talks between the West and Iran which resumed this week. A deal could lift U.S. sanctions on Iranian oil, and could thus return more than one million barrels per day, equating to more than 1% of global supply, to the market.

That said, Goldman Sachs (NYSE:GS) estimates that if a deal with Iran was signed next month, it would take until the third quarter for enough Iranian oil to come on the market to impact prices.

Crude Oil Lower After CPI Jump; OPEC Remains Upbeat

Disclaimer:Fusion Mediawould like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

This is what both Suze Orman and Ramit Sethi say you should do if you’re worried about inflation

Previous article

Wall Street Opens Lower, Trims Losses as CPI Surge Intensifies Rate Fears

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News