Inflation Report Spurs Drop in Oil Prices
NEW YORK --- Oil prices fell on Friday, Dec. 14, after the U.S. federal government reported that consumer inflation last month was the highest it's been in more than two years.The economic news has raised concerns among energy investors that rising inflation will reduce consumers' buying power, and demand for gasoline will suffer as a result. Another concern is that higher inflation will bring a halt to the Fed's recent rate-cutting campaign, the Associated Press reported.Light, sweet crude for January delivery fell 98 cents to $91.27 a barrel on the New York Mercantile Exchange on Friday. For the week, the contract climbed $2.99, or 3.3 percent.November's 0.8 percent increase in the Consumer Price Index was led by gasoline prices.In other news, a new report from the Energy Department's Energy Information Administration (EIA) projected that oil prices will continue to drop. The report projects that the West Texas Intermediate crude price will fall to about $86 per barrel by the end of winter. In explaining its projections, the EIA cited lower global demand, increased OPEC production, increased refinery operations in the U.S. and Europe, U.S. housing market concerns, and the easing of tensions between the West and Iran.