Oil loses momentum following US inflation data

Oil prices have lost momentum 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 0.4% in August, after rising by 0.2% in July.

On an annual basis, the US CPI advanced 2.9% last month, higher than the 2.7% growth seen in July.

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

Oil prices have moved lower following the inflation data, as it dampens the likelihood of interest rate cuts by the US Federal Reserve (Fed) at its upcoming meeting later this month.

The broader financial market had expected the month-on-month headline inflation to come in at 0.3%, according to SPI Asset Management managing partner Stephen Innes.

Higher interest rates in the US can dampen demand growth and make dollar-denominated commodities like oil more expensive for holders of other currencies.

By Aparupa Mazumder

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