WTI nosedives to new eight-month-lows, below $79 per barrel

WTI, drops below $80.00 per barrel on Friday, while the US Dollar remains buoyant as the US Dollar Index rises to levels last seen on May 2002, a headwind for the US dollar-denominated commodity. Therefore, WTI is trading at $78.80, below its opening price by almost 6%, after hitting a daily high of $83.92.

During the week, WTI is already down by 8%, extending its decline to the fourth consecutive week. On Wednesday, the US Federal Reserve’s decision to increase rates and emphasize the need to further hikes is impacting oil prices.

The frenzy of other central banks lifting rates, raised worldwide recession fears. Therefore, oil demand would diminish. The crude market is under heavy selling pressure as US dollar maintains strong upward trajectory amidst more reduction in risk appetite.

Market sentiment shifted sour, bolstering the dollar. US equities are dropping between 2.13% and 3.44%, extending their weekly losses. Contrarily the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, is rising 1.39% at 112.808, refreshing two-decade highs.

Adding to recessionary fears was a tranche of S&P Global PMIs, revealed during the day. The UK and the euro area PMIs, were below estimates and prepared to hit a recession, with most indices sitting in contractionary territory. In contrast, US PMIs, were mixed, though the three components improved, keeping hopes high that the US economy could dodge a recession.

Besides, as reported by a US official, the Iran nuclear deal has stalled as Tehran insists on the closure of the UN nuclear watchdog’s investigations.