New York, NY - Oil prices witnessed a decline on Friday, influenced by the strength of the US dollar and investor actions geared towards profit-taking. The downturn came after reports indicated higher than anticipated consumer price inflation data, fueling concerns that the US Federal Reserve (Fed) might sustain elevated interest rates for an extended period.
According to Philippines News Agency, the Producer Price Index (PPI) for February showcased a 1.6 percent year-on-year increase, surpassing the market's forecast of a 1.1 percent rise. This significant jump, the largest since September 2023, has contributed to the apprehension surrounding the Fed's upcoming meeting on March 20, where it is speculated that the decision might lean towards maintaining higher rates longer than previously expected.
The strength of the US dollar, which saw a 0.58 percent increase to 103.36 on Thursday, plays a crucial role in the current dynamics, making oil more costly for holders of other currencies and potentially dampening demand. Despite this, the American benchmark West Texas Intermediate (WTI) and the International benchmark Brent crude experienced drops of 0.42 percent and 0.47 percent, respectively, in their trading values.
This decline in oil prices was somewhat mitigated by heightened demand within the US, the world's largest oil consumer, and ongoing supply concerns stemming from geopolitical tensions in the Middle East and the conflict between Russia and Ukraine. The geopolitical unrest, coupled with a decrease in US crude inventories, prompted investors to engage in profit-taking during early Friday trading, adding to the pressure on oil prices.