WTI is struggling to regain $87.00 on soft US inflation data

• Oil prices bounce up from $84.70 lows to reach levels past $87.00.
• The Dollar plunges on soft US CPI data.
• Hopes of Fed easing have boosted risk appetite.

WTI prices appreciated on Thursday to hit session highs right above $87 following a 7.5% sell-off over the last three days. The US Oil benchmark, however, has been rejected at $87.25 before pulling back to the $86.50 area.

The Dollar plummets on soft US CPI figures

Consumer inflation eased beyond expectations in October. The monthly CPI increased 0.4%, unchanged from September, against market expectations of a 0.6% advance. Yearly inflation increased by 7.7%, down from 8.2% in September, while the market had anticipated an 8% reading.

The Core CPI, a gauge closely observed by the Federal Reserve to assess inflation trends, accelerated at a 0.3% pace, from 0.6% in September. Year-on-year, the core inflation increased 6,3% from 6.5% in September, while the market has forecasted a softer deceleration, to 6.5%.

These figures suggest that inflation might have peaked and provide some room for the Federal Reserve to consider slowing down its monetary tightening plan. This has brought back the idea of a softer rate hike in December, which has hurt the US dollar, boosting equity markets across the world.

At the same time, the US weekly jobless claims data revealed that 225,000 workers filed for unemployment benefits in the week of November 4, up from 218,000 in the previous month and above the 220,000 expected. These figures add to the evidence that labor market conditions might be loosening, offering further reasons for the Fed to lift its foot off the rate hike pedal.

Technical levels to watch