Crude oil fell below $84 a barrel today in Asia after the U.S. credit rating was downgraded by Standard & Poor's which was a blow to confidence that might hurt economic growth and raise concerns over the outlook for demand from the world's largest oil consumer.
Light sweet crude oil for September opened today at $85.07 a barrel recording the intraday high at $85.35 a barrel and a low of $83.17 a barrel and is currently trading around $84.59 a barrel.
The dollar fell against the euro and other major currencies for the second consecutive day after Standard & Poor's agency cut the credit rating for the United States, raising fears about the future of the global economic recovery.
The USDIX opened today at 73.98 recording the highest at 74.48 and the lowest at 73.94 and is currently trading around 74.04.
Standers & Poor's reduced the U.S. long-term credit rating by one notch to AA+ from the top grade AAA held since 1917.
This comes after Moody's Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. on Aug. 2, the day President Barack Obama signed a bill that ended the debt-ceiling impasse supporting the Treasury to the edge away from default.
G-7 finance ministers and central bank governors pledged in a statement that they will "take all necessary measures to support financial stability and growth." Officials will act against disorderly currency moves and will inject liquidity as needed, they said after a call late yesterday.
Moreover, in a statement issued yesterday in the name of Jean - Claude Trichet the president of the ECB signaled the readiness to start buying Italian and Spanish bonds in an attempt to contain the sovereign debt crisis and said that he will actively implement its bond purchase program, and the statement also called on all the government in the euro area to follow through on the steps which were agreed to on July 21.
Fears of a global meltdown, which some see as possibly worse than the 2008 collapse, sent leaders into a series of phone calls between Berlin, London, Paris and Washington to stem the tide while oil is hammered on the bearish outlook for demand and growth which is adding more downside pressure on the commodity to continue the southern trip.