On Thursday, February 29, oil prices barely moved as US inflation data from January supported forecasts of a rate reduction in June. Although US prices increased in January, the yearly rise in inflation was the lowest in over three years, meaning that the Federal Reserve may yet decide to lower interest rates.
At $83.66 a barrel, Brent crude futures for April saw a two-cent decrease. The more active May contract was up two cents at $82.17, while the April contract expires on Thursday. Crude futures for US West Texas Intermediate increased by 25 cents to $78.79. For the past three weeks, Brent has been steadily above $80, and the Middle East war has had very little effect on the flow of crude.
The U.S. personal consumption expenditures (PCE) index, the chosen inflation indicator of the Federal Reserve, was the main topic of discussion on Thursday. Early in February, reports on producer and consumer prices hinted at sticky inflation and a cautious stance from Fed members.
According to the Energy Information Administration, US oil stocks increased by 4.2 million barrels for a fifth straight week on Wednesday. It was anticipated that inventories would increase by just 2.7 million barrels.
“With the demand outlook remaining uncertain, we think OPEC will extend the current supply agreement to the end of the second quarter,” ANZ analysts mentioned in a note.
Meanwhile, there are no indications that the Middle East conflict will end, as Israel and Hamas downplay any chance of a truce in their struggle in Gaza. According to mediators from Qatar, the most divisive topics are still unresolved.
