Oil price plummets to historic lows, Wall Street dips

Oil price plummets to historic lows, Wall Street dips

Oil price plummets to historic lows, Wall Street dips

The front-month May WTI contract slumped as much as 21% overnight to under $15/bbl, the lowest level since March 1999, after losing nearly a fifth of its value last week.

The price of a West Texas Intermediate (WTI) barrel is a benchmark for US oil.

But the market's most dramatic action by far was in oil.

Plunging crude prices pulled global equity markets lower and investors moved to the safety of US Treasury securities, pushing yields slightly lower as any risk of near term inflation all but evaporated with the price of spot oil cheaper than free. At the start of 2020, a barrel cost around $60.

"Concern continues to mount that storage facilities in the USA will run out of capacity", the bank added. This may prove to be one of the worst deliveries in history.

"The cavalry (OPEC-plus cuts) won't arrive in time to save this oil market". But the oil price slump has cancelled out the rand losses, and - at this stage - will ensure a deep cut in petrol and diesel prices. Lower economic activity means weaker demand for crude oil and its byproducts, including gasoline and jet fuel.

The European benchmark contract, London Brent North Sea oil for June delivery, was down 6.3 percent at $26.30 per barrel. With no end in sight, and producers around the world continuing to pump, that's causing a fire-sale among traders who don't have access to storage. "The world is using less and less oil and producers now feel how this translates in prices", Tonhaugen added.

With global oil demand plunging due to the rapid spread of the deadly coronavirus, prices have been in a tailspin, giving an opportunity for India's ambitious and costly Indian Strategic Petroleum Reserves programme.

Low energy prices bring good tidings for major consumers such as India. The extreme move showed just how oversupplied the US oil market has become with industrial and economic activity grinding to a halt as governments around the globe extend shutdowns due to the swift spread of the coronavirus.

Overall, analysts expect earnings for S&P 500 firms to fall 13.5% in the first quarter, according to IBES data from Refinitiv, while Goldman Sachs has predicted share buybacks will halve and dividends will slide 23% in 2020.

Brent crude, the worldwide normal, was down $US1.78 to $US26.30 per barrel. A reading of an April U.S. manufacturing survey, also due Thursday, is expected to slide to recession-era levels.

Prices for deliveries even further into the future also took a nosedive, with the WTI contract for June delivery falling by 14.8% to $21.31 per barrel. In contrast, WTI is landlocked and 500 miles from water.

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