• Crude oil prices recover some of the intraday losses after reaching a two-week lowest level.
• Investors expect that improved oil prices will drive an increase in US crude oil production despite the reduction in rig count.
• US bond yields are improved on the Fed’s hawkish stance, strengthening the US Dollar (USD).

Crude oil prices retrace some of its intraday losses, although, trading lower around $88.20 per barrel during the European session on Tuesday. Russia has decided to ease its fuel export ban, initially implemented to stabilize the domestic market. This move is expected to alleviate pressure on crude oil prices.

Additionally, Saudi Arabia and Russia, the two leading global oil exporters, have played a role in pushing up WTI crude oil prices. Both nations have jointly announced an extension of their oil production cuts until the conclusion of 2023.

The economic unrest in China, the world's top crude importer is affecting sentiment regarding the demand for Crude oil. However, the latest macro data suggested economic stabilization, which could provide minor support for the liquid gold.

The oil and gas rig count declined to a total of 630 during the week ending on September 22. This marks the lowest count since February 2022. Specifically, the number of US oil rigs decreased by eight to 507, which is the lowest level recorded since February 2022, while gas rigs decreased by three to 118.

Despite the decrease in rig count, there is an expectation that higher oil prices will drive an increase in US crude oil production.

According to projections from the Energy Information Administration (EIA), US crude production is anticipated to rise from 11.9 million barrels per day (bpd) in 2022 to 12.8 million bpd in 2023 and further to 13.2 million bpd in 2024.

Market caution and upbeat US Treasury yields are underpinning the strength of the US Dollar (USD), which is putting pressure on the West Texas Intermediate (WTI) oil prices.

The US Dollar Index (DXY) trims its intraday gains and reverses from the highest level since November. However, it continues to trade higher around 106.00 by the press time.

US Federal Reserve’s (Fed) hawkish stance on interest rates trajectory reinforces the US Treasury yields, which is boosting the Greenback. The yield on the 10-year US Treasury note hovers near 4.51%, slightly below its highest level since October 2007.

Investors will likely watch key macro releases later in the week, including US Consumer Confidence, Durable Goods Orders, Initial Jobless Claims, and the Core Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred measure of inflation.

These key events will provide important insights into inflationary pressures in the US economy and could help in shaping the trading decisions involving the Greenback, which may impact the Crude oil prices.