Crude oil rises as U.S. CPI shows a further slowdown

Crude oil futures closed higher on Thursday (Jan. 12) after the U.S. released inflation figures. This is expected to encourage the U.S. Federal Reserve (Fed) to slow down the rate hike.

  • WTI crude futures rose 98 cents, or 1.27%, to close at $78.39 a barrel.
  • BRENT crude futures rose $1.36, or 1.65%, to settle at $84.03 a barrel.

The U.S. Labor Department reported that the consumer price index (CPI), which includes food and energy, rose 6.5% in December from a year earlier. The increase slowed from 7.1% in November and was the smallest increase since October 2021. The figures were also in line with analysts’ expectations.

Month-on-month, the CPI fell 0.1% in December, in line with analysts’ expectations. This is the sharpest month-on-month decline since April 2020, when the U.S. economy faced lockdown measures to contain the spread of COVID-19.

A slowdown in the CPI suggests that inflation in the U.S. has peaked and is likely to be a catalyst for the Fed to slow its rate hike. Investors now weight the expectation that the Fed will raise rates by only 0.25% at its Jan. 31-Feb. 1 meeting at more than 90%, having previously given it a 76.7% weighting.

The market was also driven by hopes that China’s opening will boost oil demand. The Goldman Sachs analyst team predicted that crude oil prices will reach $110 per barrel by the third quarter of this year as China’s opening will boost oil demand. This will particularly apply to air, rail and car transportation.

The weakness of the dollar also contributed to the fact that crude oil contracts in other currencies became cheaper. The dollar index fell 0.87% against the six major currencies in the basket of currencies last night, reaching the level of 102.2910.

The Spot Market is Open

Friday, January 13, 2023

Energy
Updated at
USD
Price

Change

%Change
Crude Oil
10.40

78.22

-0.17

-0.22%

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