Oil moves higher following US inflation data

Brent crude’s price inched up following the release of the latest softer-than-expected US inflation data.

CONCEPT: An oil barrel and US Dollar bills. Getty Images

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).

On an annual basis, the US CPI increased to 2.8% in February, down from the 3% growth seen in January.

Oil prices have reacted positively to the “relatively soft” inflation data. It opens the window for interest rate cuts by the US Federal Reserve (Fed) this year, as it tries to bring inflation under its 2% target.

“Crude oil rallied as bullish economic data triggered a risk-on tone across markets,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

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

“US consumer prices rose at their lowest pace in four months, easing concerns of stagflation,” Hynes added.

By Aparupa Mazumder

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