Brent’s price gets a boost as US inflation eases in June

The front-month ICE Brent contract gained $0.32/bbl to settle at $85.40/bbl on Thursday, after US CPI data showed a decline in growth rate last month.

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Inflation growth in the US, measured by the change in the Consumer Price Index (CPI), declined to 3% year-on-year in June, from 3.3% in May, data from the US Labor Department's Bureau of Labor Statistics (BLS) showed.

The annual US CPI reading for June was below the market expectation of a 3.1% rise, according to economists polled by Reuters.

Besides, the latest CPI reading marked the first monthly decline since May 2020.

This news has suggested that inflation in the US is gradually declining and has boosted the expectation of a September interest rate cut by the US Federal Reserve (Fed).

“US CPI data was cooler than expected across the board,” analysts at Saxo Bank remarked. “This was a welcome news for the Fed as Powell [the US Fed chairman Jerome Powell] has indicated that he needs to see more good inflation data before cutting rates, and a September rate cut is now fully priced in,” they added.  

Lower interest rates in the US can boost demand growth as it makes dollar-denominated commodities like oil cheaper for non-dollar holders.

By Aparupa Mazumder 

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