WTI’s recovery stalls below $89.00 with the US dollar surging

The solid recovery in oil prices witnessed during Tuesday’s Asian And European sessions, has lost traction during the US session, weighed by a sudden USD rally. WTI futures have been capped at $89.40 after having bounced up from $85.30 lows on Monday.

The US dollar jumps on bright US data

A set of better-than-expected US macroeconomic figures released earlier on Tuesday have boosted confidence in the strength of the US economy, leaving clearing the path for the Fed to continue with its aggressive tightening path. This has sent the US dollar higher, thus weighing on crude prices.

US manufacturing activity has posted a positive surprise. The ISM PMI slowed down to 50.2 in October, better than the 50 reading expected and the S&P PMI confirmed the good news. October's 50.4 reading reveals that sector activity expanded, against the expectations of a moderate contraction, at 49.9.

Beyond that, the JOLTS job openings have shown an increase to 10.7 million vacancies in September, up from 10.2 million in August, instead of the decline to 10 million anticipated by the experts. These figures demonstrate the tight conditions of the US labor market, despite the Fed’s efforts to cool it off in order to curb inflation.

Previously, Oil prices had rallied more than 3% in a risk-on session amid growing speculation pointing out to a Fed pivot in December. The federal funds futures market had priced in a 57% chance of a 0.50% rate hike in December, which sent the USD tumbling across the board during the Asian and European sessions.

Technical levels to watch