DTN Oil Update
Oil Prices Dip Despite Lower-Than-Expected US Inflation
SECAUCUS, N.J. (DTN) -- Oil futures reversed its early upward trend on Friday, Oct. 24, despite the U.S. Bureau of Labor Statistics (BLS) reporting tame inflation data for September that could prompt the Federal Reserve to cut interest rates.
The BLS reported that the U.S. Consumer Price Index increased 0.3% in September, after rising 0.4% in August, bringing the annual rate of inflation for the all-items index to 3%.
While the annual inflation reading was higher than the 2.9% in the prior month, it was lower than market expectations for a year-on-year growth of 3.1% for the CPI. That was expected to give the Federal Red the impetus to cut rates again when the central bank holds a policy meeting on Oct. 29, after a September rate reduction of 25 basis points.
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Despite Friday's decline in oil futures, both crude benchmarks finished the week 8% higher for their biggest weekly advance since the first week of June and after three prior weeks of losses.
November RBOB gasoline futures eased $0.0021 to $1.9248 gallon, while the front-month ULSD futures contract rose $0.0056 to $2.4086 gallon.
The U.S. Dollar Index gained 0.021 points to 98.75 against a basket of foreign currencies.
Oil prices retreated from their early advance in the day after.
The downside in oil prices was limited by a media report saying Indian refinery Reliance will comply with Western sanctions against Moscow while maintaining relationships with its current oil suppliers.
This week's rally began after the EIA reported that U.S. crude oil inventories fell last week for the first time in four weeks, decreasing by 1 million bbl to 422.8 million bbl.
Gasoline stocks fell by 2.1 million bbl to 216.7 million bbl. Distillate fuel oil inventories slid by 1.4 million bbl to 115.6 million bbl, adding to the prior week's 4.6 million bbl draw.
The bullish momentum increased after the U.S. Treasury Department intensified its existing sanctions -- imposed since the 2022 invasion of Ukraine -- by targeting major energy firms Rosneft and Lukoil. The latest measures effectively freeze all property and interests of these companies within the United States or under the control of U.S. individuals.
Adding to the pressure, the European Union approved its 19th sanctions package on the same day. This includes a phased ban on Russian LNG imports and new restrictions aimed at vessels and financial activities connected to Moscow's oil network.