Brent loses momentum ahead of crucial US economic data
The front-month ICE Brent contract has moved $0.76/bbl lower on the day, to trade at $80.04/bbl at 09.00 GMT.
PHOTO: An oil pump jack. Getty Images
Upward pressure:
The latest round of US sanctions against Russia’s energy sector, targeting the country’s largest oil and tanker companies, has supported Brent’s price this week.
Oil market analysts expect these sanctions to tighten over the coming days as Donald Trump prepares to take office on 20 January.
Brent’s price gained more support after the American Petroleum Institute (API) reported a drop in US crude oil inventories, supporting demand growth projections.
Crude oil inventories in the US declined by 2.6 million bbls in the week that ended 10 January, according to the API estimates.
“Crude futures rebounded with Brent trading back above $80, supported by sanctions angst, a potential eight weekly decline in US stockpiles,” analysts from Saxo Bank noted.
The broadly followed US government data on crude oil stockpiles from the US Energy Information Administration (EIA) is due later today.
Downward pressure:
Brent’s price gains were capped ahead of US Consumer Price Index (CPI) data, which will be out later today.
Inflation rate in the US, measured by the change in CPI, is the key focus this week as financial markets await the Federal Reserve's next steps on easing monetary policies in 2025.
The US CPI data is also expected to support the US Dollar, according to market analysts. “Today’s Consumer Price Index (CPI) looms large, poised to bolster the greenback potentially,” SPI Asset Management’s managing partner Stephen Innes said.
A stronger US dollar makes commodities like oil costlier for non-dollar holders, ultimately denting demand in the market.
By Aparupa Mazumder
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