The extreme volatility in energy markets highlights investors' worries about the duration of the Coronavirus outbreak and its impact on the economy
An offshore oil platform in the Pacific Ocean off Huntington Beach, California; The benchmark US oil contract was down $4.78 at just $15.65 per barrel on Tuesday Pic/AFP
The oil market plunged further on Tuesday on concerns over a collapse in demand as the pandemic leaves factories, cars and airplanes idled around the world. The extreme volatility in energy markets highlights investors' worries about the duration of the Coronavirus outbreak and its impact on the economy.
That is in turn weighing on financial markets more broadly, including stocks. The benchmark US oil contract was down $4.78 at just $15.65 per barrel on Tuesday, having traded as low as $11.79 a barrel at one point. The drop comes a day after the price of oil fell below zero on Monday, partly due to technical factors as traders shifted from one futures contract to another. The US oil contract for delivery in May settled at -$37.63 per barrel on Monday, an indication that investors don't want to be left holding oil at a time when storage facilities are almost full and demand is at its lowest since the mid-1990s. The tumult in the oil market reflects uncertainty over where the world economy will head as governments begin to loosen controls imposed to contain the coronavirus.
ADVERTISEMENT
"We could merely be in the eye of the hurricane as the epicenters of its rage remain centered around demand devastation and crude oil oversupply," Stephen Innes of AxiCorp. said in a commentary. "At a minimum, oil prices will be the last asset class to recover from lockdown" and only when travel restrictions are lifted, he said. Brent crude, the international standard, dropped $45.72 to $19.85. "The historic drop in WTI prices is an indication of the downward pressure which many other crude oil grades could face, given the oversupply situation," Sushant Gupta of Wood Mackenzie said. The volatility in energy markets unsettled stock markets as well. with Germany's DAX stock index losing 3.3% to 10,319 and the CAC 40 in France shedding 3.2% to 4,384. Britain's FTSE 100 declined 2.6% to 5,664.
Catch up on all the latest Crime, National, International and Hatke news here. Also download the new mid-day Android and iOS apps to get latest updates.
Mid-Day is now on Telegram. Click here to join our channel (@middayinfomedialtd) and stay updated with the latest news
This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
