Oil Prices Dip Despite Lower-Than-Expected U.S. Inflation


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures reversed its early upward trend on Friday 
(10/24) 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 October 29, after a 
September rate reduction of 25 basis points.

   Despite Friday's decline in oil futures, both crude benchmarks finished then 
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.




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