Oil Prices Drop After Release Of Us Inflation Data

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Oil Prices Drop After Release Of Us Inflation Data

Oil Prices Drop 3% After Release Of US Inflation Data

During Tuesday's session, oil prices dropped by 3% after the release of the inflation data from the USA. The data showed a slowdown in the US inflation for November, which means the chances of rate cuts starting from 2024 have become slim.

The oil market was already struggling with the concerns that the global oil demand has slowed down while the supply remains in excess. After the CPI report, the downward pressure on oil prices increased tremendously, which is already evident from the Brent and crude oil contracts.

Brent Crude Down By $2.30

After the CPI release, the Brent crude futures dropped 3%, which is equivalent to $2.30. Just like that, the WTI also dropped by 3.4% or around $2.39. After the decline in prices, the Brent Crude Futures was last seen trading near $73.33, while the WTI was trading near $68.93.

According to an analyst from PVM, the sentiment regarding oil prices remains negative. They also added that the demand side is still weak, which means no help is coming any time soon. At the same time, the fundamental situation surrounding oil prices is also very discouraging.

In 2024, the demand growth for oil will likely remain slow as even the IEA is split. However, the OPE+ is working to solve the problem as it also recently announced to limit the oil supply.

Now that the US inflation for November is finally released, the market players will be looking at the next Fed meeting. The probability of no change in the interest rate during the December meeting is very high.

According to another expert from Evelyn Partners, the CPI inflation was mostly in line with Wall Street expectations. However, they added that the path towards the 2% inflation target will be a slow one.

Looking forward, the latest updates about the US inventory levels of crude oil are due in the next few days. Any build-up of the oil stocks will further push the oil prices lower.

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