New York/Hong Kong (CNN Business) – US oil futures dropped to record lows. As the oil market is still being affected by an epic downfall in demand brought on by the coronavirus meltdown. Global markets are mixed as investors are bracing for more businesses to expose the expense of the crisis.
US oil futures were below $0 a barrel, their worst since NYMEX began oil futures trading in 1983. Monday’s crash comes after US oil dropped to an 18-year low last week. Since markets attained that the record output reductions agreed by Russia, OPEC+, and other players are not nearly sufficient to battle the reduction in demand.
Stephen Innes, chief international markets strategist in AxiCorp wrote on Monday that it has not taken a lot for the market to realize the OPEC+ bargain doesn’t, in its current form, sufficiently balance petroleum markets.
According to Bjornar Tonhaugen, head of oil markets at Rystad Energy, the May futures contract for West Texas International will expire soon. Frenzied last-minute trading is compounding worries over how much oil the US will store as demand diminishes. He stated this leads to big price swings.
For June, US oil futures dropped more than 12% to $21.87. Brent, the global standard, dropped 3.9% to below $27 a barrel.
Although London’s FTSE 100 (UKX) and Germany’s DAX (DAX) opened slightly higher, France’s CAC 40 (CAC40) was slightly negative.
Europe’s opening followed a not-so-easy day in Asia since Japan’s Nikkei 225 (N225) closed down nearly 1.2 percent as Japan recorded a sharp drop in exports last month, while Covid-19 weighed on the activity of the economy. Kospi (KOSPI) in South Korea finished 0.8% lower after most of the day looking for direction.
Hong Kong’s Hang Seng Index (HSI) ended 0.2%, while China’s Shanghai Composite (SHCOMP) finished 0.5% higher. On Monday, the People’s Bank of China cut its one-year loan premium rate by 20 basis points to 3.85%. The rate cut was generally anticipated after another main lending rate was lowered by the central bank last week.
Dow (INDU) stocks, in the meantime, had been down 105 points, or approximately 1 percent. S&P 500 (SPX) stocks fell 0.9percent and Nasdaq Composite (COMP) stocks dropped 0.6%.
Last week, Wall Street reported its second-straight week of profits. Investors seemed optimistic regarding a possible coronavirus remedy and talks about reopening parts of the US market. The explosion came even though a negative GDP report from China and information that 22 million Americans have registered for unemployment in the previous four months.
The forthcoming week will deliver additional info on how big USA businesses are influenced from the coronavirus pandemic, as firms such as Netflix (NFLX), Delta Air Lines (DAL) and Chipotle (CMG) report earnings for January, February and March.
Although it might also bring essential relief to the nation’s smaller companies. Treasury Secretary Steven Mnuchin told CNN’s Jake Tapper an arrangement with Democratic congressional leading names might be reached Sunday to supply billions of dollars more to small companies throughout the Paycheck Protection Program.