The rally in crude oil prices continued Friday on a weaker dollar and hopes the Federal Reserve will goose the U.S. economy with low interest rates for the foreseeable future.
With inflation sagging, the Federal Reserve will find it hard to make the case for further interest rate hikes. The central bank has said it intends to raise rates once more this year and three times in 2018, but analysts now regard this as too ambitious.
The Labor Department said its consumer price index was flat in June after edging down by 0.1 percent in May. Economists had expected consumer prices to inch up by 0.1 percent.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, “Earlier this week, Chair Janet Yellen reiterated that the Fed would be watching the incoming inflation data particularly closely over the coming months.”
“On the basis of June’s data, it is getting harder for the Fed to continue claiming that this is a temporary drop off,” he added.
U.S. retail sales unexpectedly decreased for the second consecutive month in June. The Commerce Department said retail sales fell by 0.2 percent in June after edging down by a revised 0.1 percent in May.
Meanwhile, signs are starting to point to a drop in U.S. production after furious output in the first half of the year.
Weekly data showed U.S. inventories tumbled the most in ten months as refinery activity picked up.
August West Texas Intermediate crude rose 46 cents, or 1%, to settle at $46.54 a barrel on the New York Mercantile Exchange for the session. Prices surged more than 5% this week.
The material has been provided by InstaForex Company – www.instaforex.com
Source: Forex News