Oil prices are declining on Friday evening during volatile trading. Quotes that started the day with a moderate decline moved to growth in the afternoon, but went down again after the publication of data on the updated 40-year high of inflation in the United States.
Consumer prices in the United States in May increased by 8.6% year-on-year – the highest since December 1981. Inflation in the country accelerated from 8.3% in April. Investors fear that the US Federal Reserve will take a more aggressive stance in the fight against price increases, which could also trigger an economic recession.

“The longer inflation remains high, the faster the Fed will raise the rate and the more obstacles to further economic growth will become,” Comerica Bank expert Bill Adams believes.

In addition, reports of the intention of the Chinese authorities to close seven districts of Shanghai on Saturday for mass testing for COVID-19 are a negative factor for the oil market. The new restrictions call into question the prospects for restoring oil demand in China, experts say.

August Brent futures on the London ICE Futures exchange fell by $1.81 (1.47%) to $121.26 per barrel by 18:30 Moscow time.

The price of WTI futures for July at the session of the New York Mercantile Exchange (NYMEX) fell by this time by $1.55 (1.28%) to $119.96 per barrel.

At this rate of decline in quotations, oil may end the week with a decline, interrupting a long period of recovery. Brent has been growing for three weeks in a row, WTI – six.

Inflation in the US reached the level of December 1981

The US Central Bank is closely monitoring inflation data, which is one of the important factors in making decisions regarding monetary policy. The Fed’s inflation target is 2%.

Energy prices jumped by 34.6%, the highest since September 2005, compared with 30.3% in April, while gasoline prices doubled (by 106.7%), which was a record high.

The cost of food increased by 10.1%, the growth rate exceeded 10% for the first time since the end of March 1981.

Prices for new cars increased by 12.6%, for used cars and trucks – by 16.1%.

The increase in consumer prices compared to the previous month in May was 1% versus 0.3% in April. The consensus forecast of analysts provided for an increase of 0.7%.

Prices excluding the cost of food and energy (Core CPI index) increased by 6% year-on-year and by 0.6% month-on-month last month. In April, the increase was 6.2% and 0.6%, respectively.

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