Oil prices edge higher after U.S. inflation data; supply cues in focus
Investing.com-- Oil prices edged higher Thursday as traders digested key U.S. inflation data as well as differing cues on supply from the U.S. and the Organization of Petroleum Exporting Countries.
By 08:50 ET (13.50 GMT), the U.S. crude futures traded 0.4% higher at $78.88 a barrel and the Brent contract climbed 0.2% to $82.28 a barrel.
PCE price index data released earlier Thursday indicated that U.S. inflation remained sticky in January, providing credence to the comments from a number of Fed officials this week that more work was needed to bring inflation in line with the central bank’s 2% annual target.
The core PCE price index, the Federal Reserve's favorite inflation gauge, rose 0.4% on the month in January, an annual rise of 2.8%. While this was largely as expected, there had been fears of an upside surprise given the consistency of the warnings by the Fed officials that inflation was not conquered.
Fears of higher rates have been a key weight on oil, given that economic conditions and demand usually deteriorate in high rate environments.
Oil markets were also digesting somewhat mixed signals on the state of supplies in the coming months.
Official U.S. inventory data showed stockpiles grew more than expected in the week to Feb. 23, which ANZ analysts said indicated that the “market may not be as tight as originally thought.”
U.S. production also remained at record highs- a trend that markets expect will help plug some supply gaps from OPEC cuts and Middle East disruptions.
But expectations of extended OPEC cuts, following some media reports this week, were a key support to oil prices in recent sessions, with analysts forecasting tighter markets this year.
The OPEC is now widely expected to maintain its current
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