Oil Prices Slip in Asian Trade on U.S. Inflation Data, But Set for Second Week of Gains
Oil prices dipped slightly in early Asian trade on Friday due to stronger-than-expected U.S. inflation data raising doubts about future interest rate cuts. However, prices are on track for a second consecutive week of gains as concerns about supply disruptions in the Middle East and the impact of Hurricane Milton on U.S. oil production linger.
Brent crude expiring in December fell 0.5% to $78.98 a barrel, while WTI crude dropped 0.4% to $74.79 a barrel by 21:15 ET (01:15 GMT).
Strong CPI data dampens rate cut expectations
The dollar’s strength following the hot U.S. inflation data has raised concerns about a slower pace of interest rate cuts by the Federal Reserve. This could lead to U.S. rates staying relatively high for a longer period, potentially impacting economic activity and demand in the world’s largest fuel consumer.
Despite concerns over slowing demand, oil prices have not been significantly affected this week. The market is also keeping an eye on Hurricane Milton’s impact on oil production, although most infrastructure in the Gulf of Mexico seems to have been spared.
Oil poised for weekly gain amid Middle East tensions
Brent and WTI futures are set to record gains of 1% to 1.8% this week, marking their second consecutive week of positive performance. Tensions in the Middle East, particularly the Israel-Hamas conflict and the potential for disruption in oil supplies, are providing support to oil markets.
Concerns have escalated following Israel’s strikes on Hezbollah targets in Lebanon, with fears of further escalation and potential attacks on Iranian oil facilities. Market focus is also on China’s stimulus measures, as Beijing prepares to announce additional fiscal stimulus measures on Saturday.