WTI crashes to near the $70.50 level amid a gloomy outlook

• WTI has fallen sharply to around $70.63 on news reports of Blinken’s visit to Saudi Arabia.
• Central banks around the world are preparing for another interest rate hike to strengthen their side in the battle against high inflation.
• Hopes of a recession will soar as commercial bank lending activity is further reduced by rising interest rates.

The futures of West Texas Intermediate (WTI) on NYMEX they have registered an intense massive sale at the beginning of the European session. The price of oil has shown a vertical decline and has fallen to near $70.63. Black gold has given away most of its post-gain gains on optimism about production cuts by Saudi Arabia.

The DXY Dollar Index has shown a decent rally move after finding strength near crucial support at 103.80. The strong recovery of the DXY index has also weighed on the price of oil.

Despite Saudi Arabia’s announcement of production cuts, oil prices fail to break out of bearish trajectory. It seems that dismal demand is the main catalyst dragging oil prices lower. Central banks around the world are bracing for another interest rate hike to strengthen their side in the battle against stubborn inflation.

The Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE) are expected to further tighten monetary policy this month.. Central banks on this side of the Atlantic are widely expected to raise interest rates for good, while views on the Fed’s interest rate decision are mixed.

After a new cycle of rate hikes, hopes of a recession in the global economy will skyrocket, since the lending activity of commercial banks would be further reduced. Investors should note that Germany has already reported a recession after posting a back-to-back Gross Domestic Product (GDP) contraction.

The price of oil has been pressured by US Secretary of State Antony Blinken’s trip to Saudi Arabia June 6-8. The visit to the world’s biggest oil exporter is scheduled days after Riyadh pledged to further cut oil production, a move that is likely to will add tension to a relationship between the United States and Saudi Arabia already strained by the kingdom’s human rights record and disputes over US policy on Iran, Reuters reports.