US inflation data supports oil prices

Brent’s price has found some support following the latest US inflation data released by the US Bureau of Labor Statistics (BLS).

IMAGE: An oil pump jack with the US flag in the background. Getty Images

The US inflation rate, based on the Consumer Price Index for all urban consumers (CPI-U), increased by 0.2% in January, slightly lower than the 0.3% growth noted in December.

Brent’s price has found some support following the soft inflation data, as it boosts the likelihood of further interest rate cuts by the US Federal Reserve (Fed) during this year.

Lower interest rates in the US can support demand growth and make dollar-denominated commodities like oil less expensive for holders of other currencies.

On an annual basis, the US CPI advanced 2.4% last month – lower than the 2.7% growth seen in December.

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

By Aparupa Mazumder

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