WTI drops firmly below $77.00 on mixed global PMIs and deepening fears of more rate hikes

• Oil prices have slipped sharply to near $76.75 in hopes of a global slowdown.
• Western central banks are expected to raise interest rates further to soften galloping inflation.
• Mixed global PMIs would force analysts to a downward revision in the oil demand.

West Texas Intermediate (WTI), futures on NYMEX, have shown a perpendicular fall below $77.00 in the early European session. The oil price has sensed immense pressure after the release of mixed global Purchasing Managers Index (PMI) numbers and accelerating fears of more interest rate hikes from the Western central banks.

The recovery move in the US Dollar Index (DXY) has also weighed heavily on the oil price. The USD Index has reached near 101.85 after a recovery move as upbeat preliminary United States S&P PMI figures have strengthened expectations of consecutive 25 basis points (bps) interest rate hike from the Federal Reserve (Fed).

Friday’s global PMI data indicated that the US economy is recovering firmly as figures beat estimates strongly. In the shared continent and the United Kingdom economy, Manufacturing PMIs fell sharply and propelled fears of a decline in oil’s forward demand. In spite of slowdown fears, central banks of the respective economies are bound to raise interest rates further to arrest stubborn inflation.

The Bank of England (BoE) is expected to hike rates further by 25 bps to 4.5% and the European Central Bank (ECB) would follow the same path and will push rates to 3.75%. This may impact the oil demand forecast further.