Gauge of long-term euro zone inflation highest since June

Flags are reflected in a window at the European Council building, a day before an E.U. heads of state summit in Brussels

LONDON (Reuters) – A key market measure of long-term inflation expectations in the euro zone rose on Thursday to its highest level since June, following a surge in oil price to near four-month peaks.

Oil prices were in sight of a 2016 high on Thursday after U.S. data showed a drop in crude stockpiles, confounding expectations for an increase and easing oversupply fears.

The five-year, five-year breakeven forward, a market measure of the euro zone’s long-term inflation expectations tracked by the European Central Bank, rose above 1.38 percent <EUIL5YF5Y=R>, its highest level since June 23.

(Reporting by Dhara Ranasinghe; Editing by John Geddie)