WTI drops to fresh eight-month-lows below $74.50 per barrel on buoyant US dollar

On Monday, the US crude oil benchmark, also known as WTI (Western Texas Intermediate), drops for the second straight day after sliding from above the $80 per barrel figure to the mid $70-$80s range. At the time of writing, WTI is exchanging hands at $76.31 per barrel, down by 3.63%.

Oil prices fell on emerging recession fears

Worries about a global economic slowdown are mounting, as energy prices have shown. Last week’s 75 bps rate hike by the Fed, alongside another 425 bps of worldwide central banks, fueled worries of a recession. Therefore, WTI remains defensive, as lower demand implies lower prices.

Sources cited by Reuters said, “With more and more central banks being forced to take extraordinary measures no matter the cost to the economy, demand is going to take a hit which could help rebalance the oil market.”

Another factor weighing US crude oil prices is the rapid rise of the greenback. The US Dollar Index, a gauge of the buck’s value vs. a basket of six currencies, edges up 0.98% at 114.128, a headwind for oil and US dollar-denominated commodities.

Elsewhere, Fed officials crossed newswires on Monday. The Boston Fed President Susan Collins expressed that further tightening is needed to temper inflation and emphasized that the unemployment rate should rise to achieve the Fed goal. Echoing her comments was Cleveland’s Fed President Loretta Mester, alongside Atlanta’s Fed President Raphael Bostic.

Oil traders’ attention turns to further US economic to be released ahead of the Organization of the Petroleum Exporting Countries (OPEC)  and allies reunion, to be hosted on October 5. The US calendar will feature durable good orders, consumer confidence, and further Fed speaking, led by Fed Chair Jerome Powell, on Tuesday.

WTI Daily Chart

WTI Key Technical Levels