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Oil pushes above $100 a barrel, raising hopes of inflation easing

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Oil rallied back above $100 a barrel in global markets yesterday amid signs the Chinese economy is regaining momentum following the recent Covid lockdowns.

Energy prices this month gave up some of this year’s bloody gains after lockdowns in major Chinese industrial hubs, including Shanghai, temporarily dampened demand.

With signs that China is picking up steam again, the scramble for global energy supplies begins.

There used to be cautious optimism that US inflation would peak, even after the official consumer price index (CPI) for March posted its fastest monthly price rise in 16.5 years and the largest annual rise in decades, with prices lower since March increased by 8.5 percent in 2021.

Optimism rose as energy costs accounted for half of the recent gains, with positive signs including monthly underlying inflation, which eased as commodity prices fell the most in two years, including used car prices.

But pressure on energy prices took much of that shine later in the day, trimming expected gains from the S&P 500 index of leading US stocks.

The March CPI reading represents what many economists expect to be the peak of the current inflationary period and captures the impact of the Russian invasion of Ukraine on February 24th.

The result is upward pressure on food and fuel prices.

“Had it not been for Putin’s imperialist ambitions, inflation would still have accelerated this month, if not nearly as much,” said Chris Low, chief economist at FHN Financial in New York.

Food prices in the US rose 1 percent in March, with home cooking being prepared even faster than reheating. Groceries rose 10 percent year-on-year, the fastest in 41 years.

High inflation and the US Federal Reserve’s dovish stance — raising interest rates to stem the rise — have caused the bond market to start pricing in a US recession in 2023, but other indicators are pointing in the opposite direction.

Employment numbers remain resilient, including new hires.

Consumer demand also remains strong, even among workers squeezed by inflation. That’s reflected in soaring airline ticket and hotel prices as the end of Covid restrictions revived the tourism industry

https://www.independent.ie/business/world/oil-pushes-back-over-100-a-barrel-and-saps-hope-of-any-let-up-in-inflation-41548045.html Oil pushes above $100 a barrel, raising hopes of inflation easing

Fry Electronics Team

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