Experts predict joy for motorists as oil prices collapse

Experts predict joy for motorists as oil prices collapse

Experts predict joy for motorists as oil prices collapse

Stocks plummeted on Wall Street on a combination of Covid-19 fears and plunging oil prices, triggering a brief, automatic halt in trading to let investors catch their breath.

Saudi Arabia ignited a price war overnoght by slashing its official selling prices and making plans to ramp up crude output next month after Russian Federation rejected production cuts proposed by the Organisation of Petroleum Exporting Countries (OPEC) to stabilise the markets in the face of the global health crisis. But he now seems to be running with the knowledge at full speed.

"Well, in the short term, I think we should be anxious", said Peter Cardillo, chief market economist at Spartan Capital Securities, in remarks to Reuters.

China's efforts to curtail the coronavirus outbreak has disrupted the world's second-largest economy and curtailed shipments to the biggest oil importer.

Global oil prices crashed by a third after Riyadh discounted its crude and signalled it would raise output. Bond yields hit new lows as investors bought them up as safe havens.

This refusal of cooperation led Saudi Arabia to initiate a price war in retaliation.

The FTSE 100 plummeted almost 9pc straight after the open, in movements not seen since the meltdown following the collapse of Lehman Brothers in October 2008.

Some of Britain's biggest companies plunged in value by billions of pounds, with oil stocks recording the most severe losses.

Wild swings in markets were evident in volatility measures in both stocks and oil on Monday.

A clash of two oil titans - Saudi Arabia and Russian Federation - is sending shock waves through energy markets, with wide-ranging implications for consumers and oil companies, including those in the No. 1 producing country, the United States. "Generally, growing demand amid declining stocks causes increases at the pump, but crude oil prices have dipped to four-year lows, signaling spring could be cheaper at the pump". The company, headed up by Igor Sechin, a close ally of President Vladimir Putin, publicly backed Russia's rejection of a new deal, instead saying a period of lower prices would hurt Rosneft's rivals in the USA shale industry.

Analysts quickly dubbed the session a new "Black Monday" - a reference to the stock market crash of October 1987, when the FTSE 100 suffered double-figure drops across back-to-back sessions.

Instead, the Saudis announced they were going to slash the cost of oil coming from their market.

To be sure, the long period of retrenchment leaves some Calgary-based producers better prepared for the current crisis than they were for the 2014 crash, which saw USA crude prices plummet from above US$100 a barrel in July 2014 to about US$26 less than two years later.

Companies have been hit by travel and other controls that are spreading worldwide as the global number of coronavirus infections rose past 110,000 globally.

The AAA said the largest weekly price decreases have been seen in IN (a 12 cent decrease) as well as MI and IL (which both had an 11 cent decrease). Berenberg, a German investment bank, forecast Monday that the fallout would push Europe into recession this year.

The spat between these vital oil suppliers comes at a critical moment; the coronavirus outbreak is squeezing economies around the globe to the point where world oil demand is forecast to shrink in 2020 for the first time since 2009.

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