Oil slips on U.S. inflation, Fed rhetoric
Investing.com — The inflation/Fed rate hike rhetoric has stepped up again with the imminent release of U.S. consumer price data, and the oil market seems to be paying for it more than other risk assets.
New York-based West Texas Intermediate, or WTI, crude settled down 87 cents, or 1.2%, at $72.99 per barrel, giving back a little of last week’s rally of 4.6% that took it to a month high of almost $74.
London-based Brent finished the U.S. trading session down 78 cents, or 1%, at $77.69 after last week’s 4.8% gain and one-month high of $78.53.
“Oil will struggle this week if inflation readings in the U.S. support the hawkish case for a couple more rate hikes, while Euro-area industrial production remains lackluster,” said Ed Moya, analyst at online trading platform OANDA.
“A bullish backwardation structure should help WTI crude find a home above the $70 level, but it seems unlikely that the demand outlook will get any good news this week.”
Crude prices slid after San Francisco Fed President Mary Daly reaffirmed talk that the Federal Reserve will probably need two more rate hikes this year to continue its fight against inflation although the pace of the central bank’s monetary tightening also needs to be slowed to preserve growth.
“We may end up doing less or more than a couple rate hikes this year, depending on the data,” Daly said in a live-streamed discussion on the economy and interest rates. “Today, with the labor market still strong, the risks of doing too little [with inflation] are outweighing the risks of doing too much. But it's appropriate to slow [the] pace of rate hikes.”
Daly’s remarks came ahead of Wednesday’s release of the Consumer Price Index, or CPI, report for June, which economists said was likely
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