Western Texas Intermediate (WTI), the US crude oil benchmark, recovered some ground due to a softer US Dollar (USD) following the May inflation report in the United States (US). At the time of writing, WTI is trading at $69.49 per barrel, a gain of more than 3%.

Fed’s potential pause on rate hikes and China’s rate cut boost crude oil prices

Oil prices are pairing some of its Monday losses due to several factors. Firstly, a US inflation report from the US Department of Labor justifies the Federal Reserve’s (Fed) stance to pause its tightening cycle, as the Consumer Price Index (CPI) rose by 4% YoY, below forecasts and the prior month’s reading. In comparison, core CPI expanded by 5.3% YoY, below April’s data, aligned with estimates.

That weakened the greenback as traders speculated about a less aggressive Fed. The US Dollar Index (DXY) trades with losses of 0.40%, at around three-week lows of 103.212.

Meanwhile, the People’s Bank of China (PBoC) cut rates on its lending rate for the first time in 10 months, aimed to stimulate China’s economy, which failed to gain momentum after lifting the Covid-19 zero-tolerance restrictions. That sparked a rise in WTI price, as China, the largest crude importer, would likely increase oil demand.

That, alongside Saudi Arabia proposed crude output cut to kick in the next month, cushioned Monday’s losses and bolstered WTI price towards the $70.00 per barrel mark.

Nevertheless, a recent report by the Organization of Petroleum Exporting Countries and its allies, OPEC , held that demand will remain steady despite slowing growth. However, it noted that Saudi Arabia’s cuts would tighten the global market in July.

Further data related to oil is expected, with the International Energy Agency (IEA) will release its latest projections, while the American Petroleum Institute (API) is scheduled to unveil its estimates of US crude oil