By Gina Lee
Investing.com – Oil was down on Friday morning in Asia, as strong U.S. inflation data stoked fears of aggressive interest rate hikes. Investors' focus is also on the outcome of U.S.-Iran talks.
Brent oil futures were down 0.38% to $91.06 by 11:41 PM ET (4:41 AM GMT) and WTI futures were down 0.27% to $89.64. Both Brent and WTI futures are also set for their first weekly decline after seven consecutive weekly gains. Both contracts had climbed to a seven-year high earlier, however.
"Yesterday's inflation number likely puts more pressure on the U.S. Fed to act more aggressively with rate hikes. This expectation is weighing on oil and the broader commodities complex somewhat," ING head of commodities research Warren Patterson told Reuters.
U.S. data released on Thursday showed that the consumer price index (CPI) grew 7.5% year-on-year, and 0.6% month-on-month, in January. The core CPI grew 0.6% month-on-month and 6% year-on-year.
The data also prompted St. Louis Fed President James Bullard to say the Fed should hike rates by 100 basis points over the next three meetings.
Talks between the U.S. and Iran to revive a 2015 nuclear deal were also revived earlier in the week. If reached, a deal could mean that the U.S. lifting sanctions on Iranian oil and easing current market tightness.
"Iranian nuclear talks appear to be progressing, which is another factor holding prices back,” said Patterson.
The talks have "reached an urgent point," and a "deal that addresses the core concerns of all sides is in sight,” according to White House spokeswoman Jen Psaki.
"The crude price rally has finally run out of steam as optimism grows that Iran nuclear deal talks are headed in the right direction and as the dollar rallies as money markets start to price in a supersized Fed hike," OANDA senior market analyst Edward Moya told Reuters.
"The oil market is still very tight, but exhaustion in the crude price rally has settled in. If the dollar continues to rally, oil prices could continue to decline further."
The Organization of the Petroleum Exporting Countries (OPEC) also said global fuel demand could rise even more steeply in 2022. The cartel forecasted a gain of 4.15 million barrels per day (bpd) in the year as the global economic recovery from COVID-19 continues.