Oil Futures Settle Lower On Aggressive Rate Hike Fears
Crude oil snapped a three-session winning streak and ended lower on Tuesday after hotter-than-expected U.S. inflation data raised concerns the Fed will aggressively hike interest rate at its upcoming policy meeting next week.
West Texas Intermediate Crude oil futures for October ended lower by $0.47 or about o.5% at $87.31 a barrel, coming off a high of $89.31 a barrel.
Brent crude futures settled at $93.17 a barrel today, down nearly 0.9% from the previous close.
The Labor Department’s data showed the consumer price index inched up by 0.1% in August after coming in unchanged in July. Economists had expected consumer prices to edge down by 0.1%.
Compared to the same month a year ago, consumer prices were up by 8.3% in August, reflecting a slowdown from the 8.5% spike in July. However, economists had expected the annual rate of growth to slow to 8.1%.
Meanwhile, the annual rate of growth by core consumer prices accelerated to 6.3% in August from 5.9% in July. The annual rate of growth was expected to rise to 6.1%.
CME Group’s FedWatch Tool is currently indicating a 78% chance of a 75 basis point rate hike and a 22% percent chance of a 100 basis point rate hike.
The dollar surged higher against other currencies after the inflation data. The dollar index climbed to 109.76, gaining more than 1.3%.
Markets now await weekly crude inventory data from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). API’s report is due later today, while EIA’s inventory data is due Wednesday morning.
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