Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Oil Keeps Tumbling as Bears Eye Low $70s for U.S. Crude

Published 09/26/2022, 02:40 PM
Updated 09/26/2022, 03:27 PM
© Reuters.
DX
-
LCO
-
CL
-

By Barani Krishnan

Investing.com -- The selloff in oil showed no signs of slowing on Monday as bears in control of the market doubled down on their bid to get U.S. crude to the low $70s and possibly beneath.

New York-traded West Texas Intermediate, which serves as the U.S. crude benchmark, settled at $76.71 a barrel, down $2.03, or 2.6%, on the day, and 40% lower from its March high of around $130. 

With September trading due to end this week, WTI is also down 14% so far on the month. Aside from that, it is headed for its first losing quarter since 2020, with a decline of 27% as of Monday for the July-through-September period.

Brent, the London-traded global benchmark for oil, settled at $84.06, down $2.09, or 2.4%, on the day and some 40% off from its March peak of almost $140. Brent is also 13% lower on the month, and off 28% for the third quarter. 

Investors have fled from risk across markets as global central banks, led by the U.S. Federal  Reserve, embark on the most aggressive rate hikes in four decades to fight inflation.

The Fed has raised rates by 300 points this year and plans to add another 125 by December, after starting from a base of just 25 in February.

Its action has sent the U.S. currency flying, with the Dollar Index, pitted against the euro and five other rivals, hitting one continuous 20-year high after another. A stronger dollar is typically bad for commodities priced in dollars, such as crude, as it makes them costlier for anyone using the euro and other currencies.

Monday’s peak of 114.42 for the so-called DX trading symbol in the dollar was the highest since its May 2002 high of 115.47.

While the rate hikes and the recession they might bring to the global economy have led the risk aversion across markets, the bears in control of oil were also looking at technical indicators that could heighten the selloff, said analysts.

“The catalyst might be economic fundamentals but there’s certainly a target to it, and that target is absolutely technical,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com. “For now, it’s $72 WTI and, if that breaks, it will be $63.”

Dixit breaks down his reading to this: With little respite for the Dollar Index’s climb, downward momentum builds on WTI to breach its 200-month Simple Moving Average of $72, before the more important test of the 50-month Exponential Moving Average of $63.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.