By Adedapo Adesanya
Oil prices rose more than 1 per cent on Thursday following the release of US inflation data for December, which showed a continued slowdown in the Consumer Price Index (CPI) and an annual inflation rate that was the slowest since October 2021.
Brent crude settled at $84.03 a barrel after rising by $1.36 or 1.7 per cent, as the US West Texas Intermediate (WTI) crude settled at $78.39 a barrel after it gained 98 cents or 1.3 per cent.
The CPI-U (the price index for All Urban Consumers) declined by 0.1 per cent in December on a seasonally adjusted basis, following a 0.1 per cent increase in November, according to the US Bureau of Labour Statistics (BLS).
The CPI-U has increased 6.5 per cent before season adjustment for the last 12 months; however, this was the smallest 12-month increase since the period ending October 2021.
The December decrease is largely due to the index for petrol in the country, which offset other increases.
The food index saw a 0.3 per cent increase over December, while the energy index saw a 4.5 per cent decrease for the same time period.
Also boosting oil yesterday was the tumbling of the US Dollar to a nearly 9-month low against the euro after inflation data lifted expectations that the Federal Reserve will be less aggressive going forward with rate hikes.
The weakening in the US Dollar makes prices of commodities like oil cheaper for holders of other currencies.
Oil prices started trading higher ahead of the inflation data, gaining as much as 3 per cent late on Wednesday, also buoyed by optimism over China’s reopening–despite the uncertainty surrounding new infection rates and deaths.
Top oil importer China is reopening its economy after the end of strict COVID-19 curbs, boosting hopes of higher oil demand.
The market is also bracing for an additional curb on Russian oil supply due to sanctions over its invasion of Ukraine almost a year ago.
The US Energy Information Administration (EIA) said the upcoming EU ban on seaborne imports of petroleum products from Russia on February 5 could be more disruptive than the EU ban on seaborne imports of crude oil from Russia implemented in December 2022.
Oil price gains were, however, limited by a hefty and unexpected jump in US crude oil inventories to the tune of 19 million barrels in the week ended January 6 to 439.6 million barrels.
