Oil gains support from US inflation data

Brent’s price has moved higher following the latest US inflation data released by the US Bureau of Labor Statistics (BLS).

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The US inflation rate, based on the Consumer Price Index for all urban consumers (CPI-U), increased by 0.3% in December, slightly higher than the 0.2% growth noted in November.

Oil prices have moved higher following the soft inflation data, as it boosts the likelihood of further interest rate cuts by the US Federal Reserve (Fed) during this year.

Lower interest rates in the US can support demand growth and make dollar-denominated commodities like oil less expensive for holders of other currencies.

On an annual basis, the US CPI advanced 2.7% last month, matching the growth seen in November.

Notably, the US central bank remains focused on bringing inflation down to its 2% target.

By Aparupa Mazumder

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