Oil moves higher following US inflation data

The front-month ICE Brent contract moved $1.33/bbl higher on Wednesday to settle at $73.52/bbl following the latest US inflation data.

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The US inflation rate, based on the Consumer Price Index (CPI), rose by 0.3% in November, edging up from the 0.2% increase recorded in the previous month, according to the US Bureau of Labor Statistics (BLS).

On an annual basis, the CPI increased to 2.7% in November, up from 2.6% in October and matching market expectations.

Oil prices have reacted positively to the data as it opened the window for a final interest rate cut by the US Federal Reserve (Fed) this year, as it tries to bring inflation under its 2% target.

“US Nov. CPI came in as expected, cementing calls for a quarter-point rate cut at next week’s FOMC meeting,” analysts from Saxo Bank said.

Lower interest rates in the US can boost demand, making dollar-denominated commodities like oil cheaper for holders of other currencies.

By Aparupa Mazumder

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