Oil: Black gold stays in the black as US inflation cools
Investing.com - Oil markets managed to stay in the black for a fourth day in a row as data showed US inflation moderated in October, cooling expectations for another rate hike before the year-end.
New York-traded West Texas Intermediate, or WTI, crude for December delivery, settled flat at $78.26 per barrel after a 3.8% rise over three past sessions. For last week though, WTI ended down 4.1%, after prior back-to-back weekly losses 6% and 3%. The US crude benchmark also tumbled 11% for October.
As WTI settled, UK-origin Brent crude’s most-active January contract was also flat at $82.52 per barrel, after a near 3.8% gain over the past three sessions. Still, Brent finished last week down 3.8%, after prior weekly losses of 6% and 2%. The global crude benchmark also lost 11% in October.
Cooling US inflation helps oil prices
US inflation was flat in October, moderating rate hike forecasts, as unchanged price growth for last month prompted investors to bet that the Federal Reserve would be less inclined to tighten monetary policy before the year end.
It was the first unchanged reading in the so-called Consumer Price Index, or CPI, in more than a year and came after a 0.4% rise in September.
Economists on Wall Street had initially bet on the CPI to rise 0.1% for October.
In the 12 months through October, the CPI gained 3.2% after rising 3.7% in September. Economists forecast a 3.3% increase year-on-year.
Inflation hit a four-decade high of 9.1% in the 12 months to June 2022.
To fight inflation, the Fed hiked interest rates 11 times between March 2022 and August 2023, raising them by 5.25% from a base rate of just 0.25%.
The central bank is scheduled to decide on rates again at a policy meeting in December. Until a week ago, Fed Chairman Jerome Powell had appeared to be leaning towards a hike.
But the flat CPI reading for October seemed to change this.
“The odds of a December hike have been completely erased,” economist Adam Button wrote on the ForexLive forum.
Oil gets surprise boost from EIA forecast
Crude prices also got a surprise boost from a supply-demand forecast issued by the Paris-based International Energy Agency, or IEA — a consumer-based organization which is often at loggerheads with the producer-based OPEC, or Organization of the Petroleum Exporting Countries.
The IEA lifted its 2023 growth forecast to 2.4 million barrels per day, or bpd, from 2.3 million. For 2024, it raised the forecast to 930,000 bpd from 880,000 bpd.
That IEA forecast came a day after OPEC boosted its forecast for 2023 global oil demand growth and stuck to its relatively high projection for 2024.
Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.
The API will release at approximately 16:30 ET (21:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended Nov. 10. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a crude stockpile drop of 0.3 million barrels, versus the 0.774-million barrel build reported in the prior week.
On the gasoline inventory front, the consensus is for a draw of 0.838M barrels over the 0.065M-barrel gain in the previous week. Automotive fuel gasoline is the No. 1 US fuel product.
With distillate stockpiles, the expectation is for a drop of 1.484M barrels versus the prior week’s deficit of 0.792M. Distillates are refined into heating oil, diesel for trucks, buses, trains and ships and fuel for jets.
(Peter Nurse and Ambar Warrick contributed to this article)
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