The likelihood of a Fed interest rate hike next week just got a lot higher

A swell of unfriendly factors for inflation likely will push the Federal Reserve to an interest rate hike next week and there's possibly another before the end of the year, judging by market pricing Thursday.

Traders pushed chances for a rate increase to 70% in morning action, following a report showing increasing wholesale prices in August and a coincidental jump in U.S. crude oil prices past $100 a barrel, according to the CME Group's FedWatch gauge.

They also nudged chances of another increase in December to close to 60% as inflation dynamics are proving stubborn and more likely to generate a central bank reaction.

"As the conflict with Iran drags on longer than many expected, inflation pressures are becoming increasingly entrenched, leaving investors in search of a catalyst strong enough to change the inflation narrative," wrote Jeffrey Roach, chief economist at LPL Financial. "At this rate, a hike in rates next week appears likely."

The producer price index , a measure of wholesale and pipeline cost pressures, rose 0.4% in August. Though that was in line with forecasts , it followed an upwardly revised 0.1% increase in July, together pushing the annual PPI level to 5.4%, slightly higher than forecast.

At the same time, intensified hostilities in the Middle East spooked commodities traders, sending U.S. crude up 4% to just over the $100 barrier.

Finally, the European Central Bank announced a quarter percentage point hike and raised its inflation forecast on worries that the Iran war would have deeper economic impacts and inflict a longer-term hit on consumer prices.

"More pressure is coming because crude and refined products have kept rising since the August data was collected," said David Russell, global head of market strategy at TradeStation. "The ongoing spike in oil, combined with low jobless claims, make it hard for the Fed to not hike next week."