Oil prices tick lower; set for positive week on M.east tensions

Oil prices fell slightly in early Asian trade on Friday as stronger-than-expected U.S. inflation data sparked some doubts over how much interest rates will fall in the coming months. 

But prices were set for a second straight week of gains as concerns over supply disruptions in the Middle East kept a risk premium in play. Markets were also watching for the impact of Hurricane Milton on U.S. oil production, as the storm tore through Florida.

Brent oil futures expiring in December fell 0.5% to $78.98 a barrel, while West Texas Intermediate crude futures fell 0.4% to $74.79 a barrel by 21:15 ET (01:15 GMT).  Strong CPI data dents rate cut bets

Oil prices were pressured by some resilience in the dollar, as hotter-than-expected U.S. consumer price index inflation spurred concerns over a slower pace of interest rate cuts by the Federal Reserve. 

The prospect of U.S. rates remaining relatively higher for longer pushed up fears that economic activity will be pressured, in turn denting demand in the world’s biggest fuel consumer. 

Data showing a bigger-than-expected build in U.S. inventories furthered concerns over slowing demand, although it had a limited impact on oil prices this week. 

In the U.S., markets were also watching for the impact of Hurricane Milton on oil production, although the storm was seen largely dodging most oil infrastructure in the Gulf of Mexico.  Oil heads for weekly gain as M.East tensions persist 

Brent and WTI futures were set to gain between 1% and 1.8% this week, their second straight week of gains. 

Oil markets remained supported by concerns over an escalation in the Israel-Hamas war, as hostilities with Hamas and Hezbollah continued. 

Israel launched devastating strikes on Hezbollah targets in Lebanon this week, diminishing the prospect of a ceasefire, even as reports said the military group was seeking a deescalation. 

Markets fear that an escalation in the conflict- especially if Israel attacks Iranian oil facilities- could disrupt oil supplies in the Middle East. 

Elsewhere, focus was also on stimulus measures in top oil importer China, after markets were mostly underwhelmed by measures unveiled in late-September. 

Beijing is now set to unveil more fiscal stimulus measures on Saturday.

Source: Investing.com