The price of gas is displayed at a gas station on January 23, 2023 in Miami, Florida.
Joe Raedle | Getty Images
Crude oil futures fell on Thursday as worries about inflation overshadowed fears of a potential Iranian strike on Israel for the moment.
The West Texas Intermediate contract for May delivery lost 74 cents, or 0.86%, to $85.47 a barrel. The June Brent futures contract fell 50 cents, or 0.55%, to $89.97 a barrel.
Oil prices rose more than 1% Wednesday after Bloomberg News reported that the U.S. and its allies see an Iranian strike against Israel as imminent.
But futures dipped in morning trading Thursday as inflation fears also haunt the market after a hotter than expected consumer price index reading for March. A measure of wholesale prices in March, released Thursday, was lower than expected, but on a 12-month basis, the gauge of producer prices climbed 2.1%, which was the biggest jump it’s logged since April 2023. The increase suggests inflation could stay elevated.
The Federal Reserve is now expected to start reducing interest rates in September, much later than originally forecast, with only two cuts now penciled in for the year, according to the CME’s FedWatch tool.
Lower interest rates typically stimulate economic growth, which fuels crude oil demand. Stubborn inflation is also raising questions about whether the U.S. economy will clinch a soft landing this year.