Brent gains following softer-than-expected US inflation data

The front-month ICE Brent contract has moved $1.17/bbl higher on the day, to trade at $71.01/bbl at 09.00 GMT.

PHOTO: Red oil barrels. Getty Images

Upward pressure:

Brent crude’s price moved higher on the back of alleviating economic concerns in the world’s largest crude oil consumer – the US.

The US inflation rate, based on the Consumer Price Index (CPI), rose by 0.2% in February, lower than the 0.5% increase recorded in the previous month, according to the US Bureau of Labor Statistics (BLS).

Oil prices have found support from the softer-than-expected CPI report as it opens the window for interest rate cuts by the US Federal Reserve (Fed) this year, market analysts said.

Brent’s gains have “priced in an uptick in economic sentiment in the broader financial markets spurred by relatively benign US February consumer inflation data,” VANDA Insights’ founder and analyst Vandana Hari said.

Besides, prices gained after OPEC left both demand and supply estimates unchanged for 2025 and 2026 in its latest monthly oil market report. OPEC continues to forecast that oil demand will grow by 1.45 million b/d and 1.43 million b/d in 2025 and 2026, respectively.

“OPEC remains fairly bullish on demand, with their numbers above both the EIA and the International Energy Agency (IEA),” two analysts from ING Bank noted.

Downward pressure:

Brent’s price gains were partially capped by a rise in US crude stocks.

Commercial US crude oil inventories increased by 1.4 million bbls to touch 435.2 million bbls for the week ending 7 March, according to data from the US Energy Information Administration (EIA).

A rise in US crude stocks indicates weakness in oil demand, which can put downward pressure on Brent crude’s price.

By Aparupa Mazumder

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