Crude gains as US inflation levels remain subdued

14 June 2013 15:03  [Source: ICIS news]

LONDON (ICIS)--Crude futures extended gains as US inflationary levels remain weak allowing the Federal Reserve to persist in its loose monetary policy programme.

By 13:30 GMT, the front-month August ICE Brent contract reached an intra-day high at $106.43/bbl, a gain of $1.48/bbl compared to the previous settlement. The contract then edged lower to trade around $106.18/bbl.

At the same time, the front-month July NYMEX WTI contract was trading around $97.90/bbl, having touched an intra-day high earlier at $98.25/bbl, a gain of $1.56/bbl against the close on Thursday.

The US producer price index - the price which companies pay for finished goods - increased by 0.50% in May from April, the first rise for three months, according to the US Department of Labor on Friday.

Although the index registered an increase, the rise was small reflecting low levels of inflation in the US.

These low inflation levels  will allow the US Federal Reserve to continue buying assets to give the US economy a boost. When the US prints money, it reduces the value of the US dollar, hence encouraging sellers to raise prices to recuperate real monetary losses.

By: Kawai Wong
+44 20 8652 3214

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