Oil retreats, drops 1.0 per cent after bearish US economic data

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Oil retreats, drops 1.0 per cent after bearish US economic data

Oil prices fell dramatically on Tuesday in a choppy trading session, paring almost all of the gains scored a session earlier, as US consumer price index jumped unexpectedly last month, eventually handing out a cushion for US Fed to hike its overnight lending cost by 75 bps (basis percentage points) while adding to holocaust for oil amid an increase in US Dollar's safe-haven bid.

However, as of Wednesday's morning US trading hour, both benchmarks were trading more than 1.5 per cent higher. In the matter of the fact, crude oil prices conventionally decline when greenback bolsters, while as US Dollar has received a reason to break free following a likely hawkish Fed stance on Wednesday’s rate decision, oil prices retreated on Tuesday.

According to data from the US Labour Department, US Consumer Prices Index, a weighted change in prices of consumers’ goods in a given period of time, rose by 0.1 per cent last month, while a 10.6 per cent drop in gasoline prices had proffered a relief.

However, costs of households’ goods alongside accommodation had been the biggest drag on August. Apart from that, US Core CPI gained 6.3 per cent over the past twelve months through August compared to the same time a year earlier.

On top of that, a recently imposed pandemic curb on China also had weighed on crude oil prices amid frets of a demand-crunch, suggested analysts.

Crude oil futures’ prices gain last month

Citing statistics, in the day’s commodity market wind down, UK crude oil futures’ prices scheduled to be expired on November fell by 0.8 per cent to $93.22 a barrel, while US WTI (West Texas Intermediate) crude oil prices dipped 0.6 per cent to $87.24 per barrel.

Meanwhile, adding that a boost to US Dollar Index had weighed on crude oil futures’ prices, a senior vice president of trading at BOK Financial, Dennis Kissler said, “The Fed may have to raise rates quicker than expected which could cause a 'risk back off' sentiment in crude and further strength to the dollar”.