SULAIMANI (ESTA) — Oil prices eased on Friday as hot U.S. inflation fanned worries about aggressive interest rate hikes.
Brent crude futures fell 55 cents to $90.86 a barrel at 0553 GMT, while U.S. West Texas Intermediate (WTI) crude was down 38 cents at $89.50 per barrel.
“Yesterday’s inflation number likely puts more pressure on the U.S. Fed to act more aggressively with rate hikes. This expectation is weighing on oil and the broader commodities complex somewhat,” Reuters quoted Warren Patterson, ING’s head of commodities research, as saying.
St. Louis Federal Reserve Bank President James Bullard had said he wanted a full percentage point of interest rate hikes by July 1, following the release of U.S. inflation data that saw its biggest annual increase in 40 years, according to Reuters.
Investors have also been eyeing indirect talks between the United States and Iran to revive a nuclear deal, which resumed this week after a 10-day break, Reuters said.
White House spokeswoman Jen Psaki said the talks have “reached an urgent point,” and that a “deal that addresses the core concerns of all sides is in sight.”
“The crude price rally has finally run out of steam as optimism grows that Iran nuclear deal talks are headed in the right direction and as the dollar rallies as money markets start to price in a supersized Fed hike,” Reuters quoted Edward Moya, senior market analyst at brokerage OANDA, as saying.
“The oil market is still very tight, but exhaustion in the crude price rally has settled in. If the dollar continues to rally, oil prices could continue to decline further.”
