US CPI Data Could Provide Support to Oil Demand Outlooks

Today’s CPI data showed US price rises eased in April, supporting hopes of rate cuts this year, and thus bullish for future oil demand.

• Core CPI At 4.0% and Supercore At 6.5% Over Six Months.
• contained dovish reaction in FOMC-dated OIS as CPI data prints inline to a touch softer than expected and the retail sales control group comes in on the soft side, coupled with a negative revision.
• Argus noted that the energy index rose by 2.6% over the 12 months ended in April, accelerating from 2.1%. However, the gasoline index eased on an annual basis to 1.2% in April, compared to 1.3% previously.
• While gasoline prices and cracks were elevated in April, demand has been seasonally weak, with the typical boost in driving demand in the run-up to the summer failing to materialise. This has helped to keep a lid on price rises.
• A return of refineries after a heavy maintenance season is also supportive on the supply side, helping to limit price gains.