WASHINGTON, D.C. (DTN) -- Except for the ULSD contract that fell more than 2% in the market-on-close trade, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Thursday's session higher in line with a rallying stock market after the U.S. consumer price index report showed core inflation metrics are ebbing, raising hopes for less aggressive interest rate hikes from the Federal Reserve.
Federal data show the consumer price index rose 0.4% in October and 7.7% from a year ago - the lowest annual increase since January and a step down from the 8.2% annual pace recorded in September. Economists were mostly expecting increases of 0.6% and 8.2%, respectively. Excluding volatile food and energy costs, the so-called core CPI increased just 0.3% for the month and 6.3% on an annual basis, also less than expected. Details of the report showed that rising prices for shelter, new vehicles and personal care were offset by falling prices for airline fares, apparel, used cars and trucks, and medical care.
The Federal Reserve has been struggling to bring down runaway inflation, which has risen to a 40-year high in recent months and has been pressuring household budgets.
So far this year, the Federal Open Market Committee raised its benchmark interest rate six times to 3.75% - 4% - the highest since 2008. Although monetary tightening is expected to eventually bring down consumer prices, the hikes also raise the chances that sharply higher borrowing rates -- for mortgages, auto purchases and other high-cost expenses -- will tip the economy into recession.
Equities on Wall Street surged in reaction to the better-than-expected inflation data, with Dow Jones Industrial rallying more than 1,100 points, or more than 3.4%, for its biggest one-day gain since stocks were emerging from the depths of the pandemic bear market in 2020. The S&P 500 jumped 5.1%, in its biggest one-day rally since April 2020. The Nasdaq Composite surged 6.7%, also its best since 2020.
NYMEX West Texas Intermediate for December delivery advanced to $86.47 bbl, up by 64 cents on the session, and ICE January Brent gained $1.02 to $93.67 bbl. NYMEX December RBOB futures added 2.17 cents to $2.5663 gallon, and December ULSD futures fell 8.69 cents to $3.5694 gallon.
Liubov Georges can be reached at Liubov.Georges@dtn.com