# Oil jumps on lower-than-expected US inflation data Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-12 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Oil prices rise on U.S. inflation data, Fed rate hike hopes Meta Description: Oil prices rose on Wednesday following cooling US inflation data, signalling a potential end to interest rate hikes and positive demand development. URL: https://financedigest.com/oil-jumps-on-lower-than-expected-us-inflation-datahtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-12t012749z1lynxmpej3b01qrtroptp4global-oil-1736814164794-compressed.jpg) By Arathy Somasekhar HOUSTON (Reuters) -Oil prices rose on Wednesday as cooling U.S. [inflation data](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") spurred hopes that the Federal Reserve is getting closer to ending its cycle of interest rate hikes and cushioned the impact of a small build in U.S. [crude oil stocks](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build"). Brent crude gained $1.49, or 1.7%, to $87.10 a barrel by 12:03 p.m. ET (1603 GMT) while U.S. West Texas Intermediate rose $1.52, or 1.9%, to $83.06. Prices had risen about 2% on Tuesday. The U.S. [Consumer Price](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") Index (CPI) climbed 0.1% last month after advancing 0.4% in February, the Labor Department said on Wednesday. In the 12 months to March 31 the CPI increased 5%, the smallest year-on-year [gain since](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") May 2021. The CPI rose 6% year on year in February. The CPI number implies, to a certain degree, that the [Fed will start cutting rates](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision") by the end of the year. That’s a positive demand development for energy,” said Robert Yawger, director of energy [futures at Mizuho Securities](https://www.financedigest.com/heres-how-to-secure-your-financial-future-with-ease.html "Here’s How To Secure Your Financial Future With Ease"). Government bonds, a gauge of global stocks, and [gold rallied while the dollar](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides") dropped sharply after the data. A weaker U.S. currency also makes dollar-priced [oil cheaper for buyers holding](https://www.financedigest.com/oil-struggles-to-hold-gains-amid-mixed-demand-view.html "Oil struggles to hold gains amid mixed demand view") other currencies. [Hedge fund](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund") were buying oil futures in the market over the past few days, in anticipation of improving demand, said Dennis Kissler, senior vice president of trading at BOK Financial. [Markets shrugged off a small build](https://www.financedigest.com/market-harborough-building-society-announces-mhr-analytics-partnership.html "Market Harborough Building Society announces MHR Analytics partnership") in U.S. [crude oil stocks](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns"), attributing it in part to a congressionally mandated release of oil from the U.S. emergency reserve and lower [exports at the start of the month](https://www.financedigest.com/sentiment-among-german-exporters-falls-for-third-month-in-a-row-ifo.html "Sentiment among German exporters falls for third month in a row -Ifo"). Crude inventories rose by 597,000 barrels in the last week to 470.5 million, compared with analysts’ [expectations in a Reuters poll for a 600,000 barrel drop](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected"). U.S. gasoline stocks fell by 300,000 barrels, while distillate stockpiles, which [include diesel and heating oil](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream"), fell by 0.6 million barrels. Both draw downs were smaller than analysts’ forecasts. Meanwhile, a [report from the American](https://www.financedigest.com/more-than-two-thirds-of-american-and-chinese-millennials-say-they-hardly-use-cash-any-more-says-new-future-of-money-report.html "More than two thirds of American and Chinese millennials say they hardly use cash any more, says new Future of Money report. ") Petroleum Institute (API) showed crude inventories rose by about 380,000 barrels in the last week, while gasoline inventories were also higher, according to sources. In a negative for [oil demand](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook"), the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates. The [market is also waiting](https://www.financedigest.com/jittery-markets-attempt-risk-on-rally-while-waiting-for-powell.html "Jittery markets attempt risk-on rally while waiting for Powell") for clarity on oil demand and supply, with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday respectively. The U.S. Energy Information Administration on Tuesday cut its forecast for [oil production by OPEC countries by 0.5 million barrels per day for the rest of 2023 and cut its 2023 world oil demand](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") growth forecast by 40,000 bpd. (Reporting by Arathy Somasekhar; Additional reporting by Muyu Xu and Ahmad GhaddarEditing by David Goodman, Kirsten Donovan) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---