Oil drops today despite heading for weekly gain

Oil prices fell during trading on Friday, as crude contracts shed some of their gains from the previous session amid anticipation for further stimulus from China at the beginning of next week. This comes after stronger-than-expected data on the Producer Price Index inflation released in the United States today, coinciding with developments in the Middle East.

However, today's losses were not sufficient to erase the week’s gains after the strong profits recorded by crude, with contracts currently on track to achieve their second consecutive weekly increase.

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In terms of trading, Brent crude futures fell by 0.85% to settle at $78.56 per barrel, while West Texas Intermediate (WTI) crude futures decreased by 0.72% to $74.98 per barrel.

What Influences Oil Movements?

Today's data showed that the core Producer Price Index (PPI) rose more than expected, highlighting concerns that core inflation may remain persistent in the U.S. economy, which could prevent the Federal Reserve from implementing many interest rate cuts next year after rising shelter and transportation costs led to a higher-than-expected Consumer Price Index (CPI).

As a result of these concerns, Raphael Bostic, a member of the Federal Reserve Bank of Atlanta, indicated that he would consider keeping interest rates steady in the November meeting, depending on economic conditions. Continued maintenance of high interest rates may sustain the constraints imposed by elevated rates on economic activity in the world's largest crude oil consumer.