Slower US inflation growth pushes Brent higher

The front-month ICE Brent futures gained $0.37/bbl to settle at $82.75/bbl yesterday after US CPI figures showed a slower-than-expected growth rate in April.

PHOTO: The US Federal Reserve's headquarters in Washington DC. Getty Images

US Consumer Price Index (CPI) rose 0.3% in April, after increasing by 0.4% in February and March, data from US Labor Department's Bureau of Labor Statistics (BLS) showed.

Economists polled by Reuters expected a 0.4% rise in CPI index on the month.

Lower-than-expected growth in US CPI in April suggested that inflation in the country is declining, which in turn supported the market expectation of a September interest rate cut by the US Federal Reserve (Fed).

“[Brent] crude futures were extending Wednesday’s modest gains…largely lifted by investors raising bets on the US Federal Reserve cutting rates this year after the country reported a dip in consumer inflation in April,” VANDA Insights’ founder and analyst Vandana Hari said.

Lower interest rates in the US can boost demand growth as it makes dollar-denominated commodities like oil cheaper for non-dollar holders.

By Aparupa Mazumder 

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