- WTI is down more than 7.50% on the week, hitting a new 8-month low.
- Global S&P PMIs in September raised fears of a global recession weighing on WTI.
- WTI Price Analysis: A break below $78.00 could pave the way for a decline to $70.00.
Benchmark U.S. crude, also known as WTI, fell below $80.00 a barrel on Friday amid a strong U.S. dollar. US dollar index growth to levels last seen in May 2002, a headwind for the US dollar-denominated commodity. Therefore, WTI is trading at $78.80, down nearly 6% from its opening price, after hitting a daily high of $83.90.
For the week, WTI is already 8% lower, extending its decline for a fourth straight week. Wednesday’s decision by the American central bank to raise rates and emphasize the need for further increases weighs heavily on the black gold. This, along with the frenzied raising of other central banks rates, sparked global recession fears. The demand for oil would therefore decrease.
Sources quoted by Reuters said: “The crude oil market is under strong selling pressure as the US dollar maintains a strong upward trajectory amid a wider reduction in risk appetite.
Meanwhile, sentiment has changed and the money has strengthened. OUR stocks falling between 2.13% and 3.44%, extending their weekly losses. Conversely, the US dollar index, a measure of the value of the dollar vs. basket of others, rising 1.39% to 112.808, fresh two-decade highs.
Adding to recession fears was the tranche of global PMIs from S&P that was revealed during the day. UK and Eurozone PMIs were below estimates and poised to hit recession, with most indices in contractionary territory. In contrast, US PMIs were mixed, although the three components improved, keeping hopes high that the US economy could avoid recession.
In addition, the US official said, the Iran nuclear deal has stalled because Tehran insists on closing the UN nuclear watchdog’s investigation.
WTI Price Analysis: Technical Outlook
The daily chart of WTI shows the price of oil falling below the lower trendline of the descending wedge, which is usually a bullish signal. U.S. crude could therefore be headed for a retest on January 1st, as well as the year-to-date low of $65.94. Although the Relative Strength Index (RSI) is at 33.25, in negative territory, but not in oversold conditions. Thus, a break below $75.00 could pave the way to $70 per barrel, en route to $65.94.