Oil prices decrease due to worries about US inflation
By 1221 GMT, West Texas Intermediate (WTI) futures were down 65 cents, or 0.78%, to $83.20 a barrel, while Brent oil futures slid 75 cents, or 0.84%, to $88.75 a barrel.
Early Asian trade on Monday saw a reversal of Friday's gains in oil prices as U.S. inflation statistics further cast doubt on the likelihood of interest rate reduction anytime soon and strengthened the dollar, which exacerbates the need for oil.
By 1221 GMT, West Texas Intermediate (WTI) futures had down 65 cents, or 0.78%, to $83.20 a barrel, while Brent oil futures had dropped 75 cents, or 0.84%, to $88.75 a barrel.
According to independent market expert Tina Teng, "the sticky U.S. inflation sparks concerns for 'higher-for-longer' interest rates," which strengthens the US currency and puts pressure on commodities prices.
According to figures released on Friday, U.S. inflation increased 2.7% in the year ending in March, above the 2% objective set by the Federal Reserve. Reduced inflation would have made interest rate reduction more likely, which would have boosted demand for oil and economic expansion.
The expectation of higher interest rates for a longer period of time supported the dollar. For holders of foreign currencies, oil becomes more costly due to a rising dollar.
However, Teng said that if China's PMI index and U.S. inventory statistics indicate improvement this week, oil prices may rise once again.
Due to worries about supply interruptions resulting from events in the Middle East, Brent ended the day Friday up 49 cents and WTI up 28 cents.
Due to Ukranian drone attacks on the Ilsky and Slavyansk oil refineries in Russia's Krasnodar area over the weekend, the market dismissed the possibility of supply interruptions. According to a plant executive, the assault forced the Slavyansk refinery to halt part of its operations.
