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U.S. Wholesale Prices Unexpectedly Fall by Most in Almost a Year

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Wholesale prices in the U.S. unexpectedly fell in July by the most in almost a year, a sign inflation is likely to stay muted.

The 0.4 percent drop in the producer-price index, the biggest since September, followed a 0.5 percent gain the prior month, a Labor Department report showed Friday in Washington. The median forecast of 63 economists surveyed by Bloomberg called for a 0.1 percent advance.

Prices in the production pipeline remain tame, reflecting the lingering influence of lower energy costs, the strong dollar and weak global demand. Federal Reserve officials, considering when to lift interest rates, are watching for signs of whether inflation is moving toward their goal.

“There’s really not much inflationary pressure at all in producer prices,” Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report. “We’re looking at a very soft global economy. The strong dollar is still a factor.”

Separately, the Commerce Department reported that retail sales were little changed in July as rising demand for autos limited purchases of other goods.

Projections for producer prices ranged from a drop of 0.4 percent to an advance of 0.4 percent, according to the Bloomberg survey of economists.

Fuel, Food

The decline in the producer price index was paced by a 1 percent decrease in energy costs and a 1.1 percent drop in food, the report showed. Profit margins at retailers and other trade services also retreated, led by a 6 percent plunge clothing and jewelry merchants that was the biggest since records began in 2012.

From a year earlier, producer prices fell 0.2 percent.

Excluding food and energy, wholesale prices declined 0.3 percent following a 0.4 percent advance the prior month. Those costs were up 0.7 percent from July 2015.

Excluding food and energy and also eliminating trade services, producer costs were little changed. Some economists prefer this reading because it strips out the most volatile components of PPI.
One caveat to the otherwise weak readings was that health-care prices, which are used to calculate the Commerce Department’s consumer spending inflation index — the Fed’s preferred price measure — picked up. Those costs rose 0.3 percent in July before adjusting for seasonal variations following, the biggest gain since October, according to the report.

The producer price gauge is one of three monthly inflation reports released by the Labor Department, the other two being import costs and consumer prices.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Oil Prices News: Oil Gains Following Drops in US Crude Inventories

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Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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Oil Prices Gain on Tuesday Despite Expected Surge in Global Oil Supplies

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Oil Prices Rise Despite Expected Surge in Global Oil Supplies

Oil prices gained on Tuesday despite Libya opening Sharara oil field for production, labour in Norway reaching an agreement with oil firms to return back to work and oil workers in the U.S returning to the Gulf of Mexico region after the Hurrican Delta.

Brent crude oil, against which Nigerian oil price is measured, gained 1.77 percent to $42.46 per barrel as at 11:15 am Nigerian time on Tuesday.

While the US West Texas Intermediate (WTI) crude oil gained 2 percent to close at $40.22 per barrel.

The improvement in prices was after oil prices plunged as much as 3 percent on Monday following a resolution reached by Libyan rebels and government to commence oil production at the nation’s largest oil field, Sharara Oil Field.

This coupled with labour agreement with oil firms in Norway was expected to boost global oil supplies and eventually weighed on prices and disrupt OPEC+ production cuts strategy.

However, prices surged after Nancy Pelosi said she would commence talks on $1.8 trillion stimulus package following President Trump’s return to the White House after he was rushed to hospital following a positive COVID-19 test.

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Joe Biden Win Could Boost Oil Prices, Says Goldman Sachs

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Oil Prices to Surge Once Joe Biden Wins -Goldman Sachs

Goldman Sachs, one of the world’s largest investment banks, has said Joe Biden win could boost global oil prices despite weak global economic outlook and COVID-19 negative impacts on the world’s growth.

The investment bank, however, remains bullish on both oil and gas prices regardless of the election outcome in November.

The bank sees oil and gas demand rising enough in 2021 to supersede election results but explained that Biden win could bolster prices by making production more expensive and more regulated for producers in the U.S.

In a note written by the bank’s commodities team on Sunday, it said “We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst.”

“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone.”

Goldman Sachs explained that if incumbent, Trump, is re-elected with pro-oil and gas policies in place that “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate capex re-allocation away from fossil fuels.”

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