NEWS
Oil jumps on lower-than-expected US inflation data
Published On :
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices rose on Wednesday as cooling U.S. inflation data spurred hopes that the Federal Reserve is getting closer to ending its cycle of interest rate hikes and cushioned the impact of a small build in U.S. crude oil stocks.
Brent crude gained $1.49, or 1.7%, to $87.10 a barrel by 12:03 p.m. ET (1603 GMT) while U.S. West Texas Intermediate rose $1.52, or 1.9%, to $83.06. Prices had risen about 2% on Tuesday.
The U.S. Consumer Price Index (CPI) climbed 0.1% last month after advancing 0.4% in February, the Labor Department said on Wednesday.
In the 12 months to March 31 the CPI increased 5%, the smallest year-on-year gain since May 2021. The CPI rose 6% year on year in February.
The CPI number implies, to a certain degree, that the Fed will start cutting rates by the end of the year. That’s a positive demand development for energy,” said Robert Yawger, director of energy futures at Mizuho Securities.
Government bonds, a gauge of global stocks, and gold rallied while the dollar dropped sharply after the data. A weaker U.S. currency also makes dollar-priced oil cheaper for buyers holding other currencies.
Hedge fund were buying oil futures in the market over the past few days, in anticipation of improving demand, said Dennis Kissler, senior vice president of trading at BOK Financial.
Markets shrugged off a small build in U.S. crude oil stocks, attributing it in part to a congressionally mandated release of oil from the U.S. emergency reserve and lower exports at the start of the month.
Crude inventories rose by 597,000 barrels in the last week to 470.5 million, compared with analysts’ expectations in a Reuters poll for a 600,000 barrel drop.
U.S. gasoline stocks fell by 300,000 barrels, while distillate stockpiles, which include diesel and heating oil, fell by 0.6 million barrels. Both draw downs were smaller than analysts’ forecasts.
Meanwhile, a report from the American Petroleum Institute (API) showed crude inventories rose by about 380,000 barrels in the last week, while gasoline inventories were also higher, according to sources.
In a negative for oil demand, the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.
The market is also waiting for clarity on oil demand and supply, with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday respectively.
The U.S. Energy Information Administration on Tuesday cut its forecast for oil production by OPEC countries by 0.5 million barrels per day for the rest of 2023 and cut its 2023 world oil demand growth forecast by 40,000 bpd.
(Reporting by Arathy Somasekhar; Additional reporting by Muyu Xu and Ahmad GhaddarEditing by David Goodman, Kirsten Donovan)
Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.
-
-
BUSINESS2 days ago
UK pay growth weakest since February 2021, REC survey show
-
-
-
NEWS2 days ago
ECB will probably cut rates in Oct on risk of too low inflation: Villeroy
-
-
-
NEWS1 day ago
Japan leads Asia stock rally, dollar firms after blowout US payrolls
-
-
-
NEWS2 days ago
Soccer-Beleaguered Man United battle to 0-0 draw at Villa
-