INA- sources
Oil prices fell on Friday and were headed for a weekly loss as strong US economic data sparked concerns of further interest rate increases, which in turn could further slow the economy and lead to a slump in crude demand.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.53 per cent lower at $83.86 a barrel at 12.14pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 1.67 per cent at $77.18 a barrel.
The US producer price index rose by 0.7 per cent in January on higher energy costs, after falling by 0.2 per cent in December, a report from the Bureau of Labour Statisticsshowed on Thursday.
Meanwhile, jobless claims in the world’s largest economy fell marginally to 194,000 in the week ending February 11, from 195,000 the in the week earlier.
“The January US PPI print provided further evidence of price inflation being more persistent than had earlier been anticipated, with two of the Fed’s more hawkish officials suggesting that the case for larger 50 basis point hikes may be returning,” said Jeanne Walters, senior economist at Emirates NBD.
Earlier this week, data from the US Labour Department showed that the consumer price index overall slowed to 6.4 per cent annual in January, from 6.5 per cent the previous month, its smallest annual increase since October 2021.
This month, the US Federal Reserve raised interest rates — for the eighth time since last year — by 25 bps, and indicated that more increases were to come.
The latest announcement puts the Fed's target range at between 4.5 per cent and 4.75 per cent — about 50 bps away from its end-of-year projection of 5.1 per cent.
“A strong dollar could emerge following a steady flow of hawkish Fed speak and that should keep any oil price rallies capped,” said Edward Moya, senior market analyst at Oanda.
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