New York-traded West Texas Intermediate, or WTI, which serves as the US crude benchmark, settled at $76.71 a barrel on Monday, down $2.03, or 2.6%, on the day. WTI has fallen 40% since hitting 14-year highs of around $130 on March 7, a fortnight after the breakout of the Russia-Ukraine war.
"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."
With September trading due to come to a close on Friday, 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. Like WTI, Brent is also some 40% off from its March peak of nearly $140. For the month, Brent is down 13%, while for the third quarter, it was 28% lower.
Investors are fleeing from risk across markets as global central banks, led by the US Federal Reserve, embark on the most aggressive rate hikes in 40 years to fight inflation.
The Fed has raised rates by 300 points this year and plans to add another 125 by December, after starting from just 25 points in February.
The central bank’s action has sent the dollar rallying to 20-year highs. 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.