U.S. markets crater as coronavirus-sparked oil war sends prices spiraling

Source: Washington Post

Wall Street is bracing for massive losses Monday as a coronavirus-fueled oil war sent crude prices plummeting more than 20 percent and amplified global recession fears. The three major U.S. indexes fell nearly 7 percent, with the Dow Jones industrial average plunging more than 1,800 points.

Oil prices tumbled into the $30s, after Saudi Arabia and Russia deadlocked over production. The Saudis had been pushing for a cut in output to prop up prices, but did a reversal when Russia balked and decided, instead, to flood the market with hundreds of thousands of additional barrels per day at a steep discount — a move analysts fear may trigger a price war.

“Cheap oil is one thing. Super cheap oil is another,” said John Kilduff of Again Capital. “The stock market is looking at the oil price plunge as a canary in the coal mine of a disinflationary one-two punch, driven partly by cratering demand for transportation fuels and a wanton price war among the major oil producers” that will result in big losses for U.S. and Canadian producers.

Cratering oil prices might please consumers at the pump, but they would be devastating for oil companies and global markets, which have already been ransacked by coronavirus panic. Brent crude, the global oil benchmark, plunged more than 21 percent to $35 a barrel, its biggest drop since the Gulf War. The price of West Texas Intermediate crude, largely used in the United States, fell from about $41 to $32 a barrel Sunday night, a low not seen in four years.

Read more: https://www.washingtonpost.com/business/2020/03/08/saudi-arabia-flooding-market-with-oil-prompting-predictions-further-decline-monday/