Oil futures settled higher on Thursday, gaining for a sixth straight session, amid expectations of increased demand from China and data showing a slowdown in U.S. consumer price inflation.
China's decision to reopen its economy after the end of strict COVID-19 curbs has boosted hopes of higher oil demand.
The dollar's decline also contributed significantly to the rise in oil prices. Additionally, there are talks of additional curbs on Russian oil supply due to sanctions over its invasion of Ukraine.
The dollar index dropped to 102.08 earlier this afternoon, and is currently at 102.27, down nearly 0.9% from the previous close.
West Texas Intermediate Crude oil futures for February ended higher by $0.98 or about 1.3% at $78.39 a barrel.
Brent crude futures were up $1.26 or 1.52% at $83.93 a barrel a little while ago.
Data released by the Labor Department this morning showed U.S. consumer price index edged down by 0.1% in December after inching up by 0.1% in November. Economists had expected consumer prices to come in unchanged.
The report also showed the annual rate of consumer price growth slowed to 6.5% in December from 7.1% in November, in line with expectations. The annual growth was the slowest since October 2021.
The annual rate of core price growth slowed to 5.7% in December from 6% in November. The year-over-year growth was also in line with expectations.
According to Edward Moya, Senior Market Analyst at OANDA, the Fed appears poised to deliver a 25 basis point rate hike at the February 1st meeting, then be data-dependent for the next two meetings.
Moya says that the inflation report supports the idea that the Fed could be close to done with raising rates soon and that the U.S. economy might avoid or see only a shallow recession. He adds that oil has been rallying on China's reopening momentum and now that they stopped reporting COVID tally data
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