By Adedapo Adesanya
The price of crude oil settled higher on Thursday as slowing inflation data from the United States offset worries that renewed COVID-19 curbs in China would hurt fuel demand.
Brent crude gained 1.1 per cent or $1.02 to trade at $93.67 per barrel, while the US West Texas Intermediate(WTI) crude rose by 0.8 per cent or 64 cents to settle at $84.67 per barrel.
After three days of declines, crude futures rallied after the inflation data supported investors’ hopes that the US Federal Reserve would temper its interest rate hikes, which could support oil demand.
US Consumer Price Index (CPI) rose less than expected in October, pushing the annual increase below 8 per cent for the first time in eight months.
The CPI increased 7.7 per cent after rising 8.2 per cent on the same basis in September. It was the first time since February that the annual increase in the CPI was below 8 per cent and the smallest gain since January.
The US Fed last week delivered a fourth consecutive 75-basis-point interest rate hike and said its fight to lower inflation to the US central bank’s 2 per cent target would require borrowing costs to rise further.
Also supporting prices was a weakening US Dollar which lured investors towards riskier assets, including oil. A weakening Dollar makes greenback-denominated oil less expensive for other currency holders.
However, pressure is coming from the world’s largest oil importer, China, as it battles a rebound in COVID-19 infections in several economically vital cities, including Beijing.
In the manufacturing hub of Guangzhou, millions of residents were told to get tested on Wednesday.
The virus keeps spreading as China’s caseload has soared to its highest since the lockdown in Shanghai lockdown earlier this year. Both Beijing and Zhengzhou also reported daily record cases.
Hopes that China was going to ease its zero COVID policy pumped up the oil market last week, but comments from health officials this week made it clear they would continue to strictly curb any outbreaks.
The market also came under pressure on Wednesday from a big rise in US crude inventories, up by 3.9 million barrels to their highest level since July 2021.
