Oil Prices surge amid anticipation of US CPI

Markets expect headline U.S. consumer price inflation slowing to 3.3% in October from 3.7% in September

By Ahmed Azzam | @3zzamous | 14 November 2023

  • Inflation focus: Investors closely watch US Consumer Price Index, anticipating a decline from last month.

  • WTI hits $78.5: Four-session climb driven by OPEC's optimistic market outlook.

  • OPEC's forecast: Raised 2023 global oil demand predictions, backed by strong Asian refining and Chinese imports.

Asian stocks posted gains today as investors eagerly awaited the release of the latest US inflation figures and insights from Federal Reserve speakers. In Japan, Australia, and South Korea, market indices experienced positive movements. Meanwhile, US futures edged higher following the S&P 500's recent close near the crucial 4,400 mark. Benchmark Treasuries experienced a decline, and the dollar stabilized, contributing to a positive sentiment in the market. Furthermore, West Texas Intermediate (WTI) crude oil extended its ascent, surpassing the $78 threshold.

US inflation watch

This surge in market activity follows a robust rally on Friday, with attention now turning to the impending release of the Consumer Price Index (CPI) data scheduled for Tuesday. Analysts are anticipating a headline increase of 3.3% for October, a slight easing from the 3.7% recorded in September. However, core prices are expected to remain unchanged from the previous month, providing a nuanced perspective on the inflationary landscape.

OPEC optimism amidst geopolitical tensions

On the energy front, WTI crude futures continued their upward trajectory, reaching approximately $78.5 per barrel on Tuesday. This marks the fourth consecutive session of gains, propelled by OPEC's assertion that market fundamentals remain robust. OPEC's monthly report adjusted its forecasts for global oil demand growth in 2023 to 2.46 million barrels per day. This optimistic outlook is attributed to strong global growth trends and a healthy oil market.

The report highlighted China's continued robust crude oil imports and the resilience of Asian refining margins. Additionally, oil prices received support from a US crackdown on Russian oil exports amid suspected violations of Western sanctions by shipping companies. Despite these positive indicators, traders maintained a cautious stance in response to reports suggesting Iraq's plans to resume oil production from the Kurdish region's oilfields and restart northern oil exports through the Iraq-Turkey pipeline.