- WTI rebound from $85.30 stalls below $89.00.
- The recovery in crude oil prices loses strength with the rise in the dollar.
- Bright US data dampens hopes of a Fed pivot in December.
The strong recovery in oil prices seen during the Asian and European sessions on Tuesday has lost steam during the US session, weighed down by a rally in the dollar. WTI Futures they have been capped at $89.40 after bouncing off Monday’s lows of $85.30.
The dollar advances thanks to the good data from the US.
A better-than-expected set of US macroeconomic data released early on Tuesday have boosted confidence in the strength of the US economy, clearing the way for the Fed to continue its aggressive tightening path. This has pushed the dollar higher, which has weighed on crude oil prices.
US manufacturing activity has provided a positive surprise. The ISM PMI fell to 50.2 in October, better than the expected 50 reading, and the S&P PMI confirmed the good news. October’s reading of 50.4 reveals that sector activity expanded, against expectations of a moderate contraction, at 49.9.
In addition, JOLTS job openings have shown an increase to 10.7 million openings in September, compared to 10.2 million in August, instead of the decrease to 10 million predicted by experts. These figures demonstrate the tightness of the US labor market, despite the Fed’s efforts to cool it to curb inflation.
Oil prices had earlier risen more than 3% in a session of risk appetite, amid growing speculation pointing to a Fed pivot in December. The fed funds futures market had priced in a 57% chance of a 0.50% rate hike in December, sending the dollar tumbling during Asian and European sessions.
Technical levels to watch
Source: Fx Street
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