Oil prices rebounded on Friday, breaking a two-week losing streak despite the strength of the dollar, following inflation data in line with expectations amidst ongoing geopolitical concerns.
At 14:30 ET (19:30 GMT), Brent oil futures edged up 0.3% to $89.85 a barrel, while West Texas Intermediate crude futures climbed 0.4% to $89.38 a barrel.
The dollar strengthened as U.S. inflation rose by 0.3% last month, bringing the 12-month figure through March to 2.7%, slightly exceeding economists’ forecasts of a 2.6% increase. The Personal Consumption Expenditures (PCE) price index, a key inflation gauge for the U.S. Federal Reserve, continues to hover around the central bank’s 2% target.
Persistent signs of inflation have tempered expectations of near-term interest rate cuts by the Federal Reserve, despite softer-than-expected U.S. gross domestic product data earlier in the week.
Meanwhile, the number of oil rigs in the U.S. dropped to 506 from 511, marking the largest weekly decline since November, according to data from Baker Hughes. This decline occurred despite steady U.S. oil output, which remained near record highs at 13.1 million barrels per day in the week ended April 19.
Recent data revealing a larger-than-expected decrease in U.S. inventories in the past week, coupled with ongoing concerns over potential disruptions to Middle East supplies, contributed to the recent price uptick. Israel’s increased strikes against Gaza and the unresolved Israel-Hamas conflict have kept risk premiums in play for oil prices, offsetting worries about weaker demand and global growth softening.
However, despite these geopolitical tensions, oil prices remain below the five-month highs reached earlier in April, as traders scaled back risk premiums following the absence of immediate escalation in the Iran-Israel conflict.
