U.S. Oil Price Plunges to 20-Year Low, Wall Street Falls
NEW YORK (Dispatches) -A glut of oil supplies sent United States crude prices spiralling to a 20-year low on Monday, as caution gripped Asian share markets on expectations that a busy week of corporate earnings reports and economic data will drive home the damage done by the global coronavirus lockdown.
Wall Street fell at the open as energy shares took a hit from a crash in oil prices, with investors bracing for a week packed with earnings reports and economic data that could provide more evidence of the damage wrought by the coronavirus.
Oil prices were under pressure as the measures to curb the spread of the virus saw fuel demand evaporate, leaving so much extra supply that countries were finding it hard to find space to store it.
So great was the near-term glut that the May futures contract for U.S. crude was trading down 15 percent at $15.54 per barrel, while the June contract shed 5 percent to $23.71.
Brent crude does not have the same storage problems and its June contract was down only 25 cents at $27.83 a barrel.
Dutch investment firm ING’s commodities strategists said the plunge in oil prices in recent weeks has forced many U.S. oil producers to halt their rigs.
"Over the last month, the total number of active oil rigs in the U.S. has fallen by more than 35 percent, highlighting the impact that the current low oil price is having on drilling activity. This drilling slowdown will translate into lower production in the coming months,” ING’s Warren Patterson and Wenyu Yao said in a research.
Meanwhile, new figures showed the damage to global trade caused by the virus.
The Dow Jones Industrial Average fell more than 2% minutes after opening down 147.39 points, or 0.61%, at 24,095.10.
The S&P 500 opened lower by 28.94 points, or 1.01%, at 2,845.62, while the Nasdaq Composite dropped 96.77 points, or 1.12%, to 8,553.38 at the opening bell.
Wall Street fell at the open as energy shares took a hit from a crash in oil prices, with investors bracing for a week packed with earnings reports and economic data that could provide more evidence of the damage wrought by the coronavirus.
Oil prices were under pressure as the measures to curb the spread of the virus saw fuel demand evaporate, leaving so much extra supply that countries were finding it hard to find space to store it.
So great was the near-term glut that the May futures contract for U.S. crude was trading down 15 percent at $15.54 per barrel, while the June contract shed 5 percent to $23.71.
Brent crude does not have the same storage problems and its June contract was down only 25 cents at $27.83 a barrel.
Dutch investment firm ING’s commodities strategists said the plunge in oil prices in recent weeks has forced many U.S. oil producers to halt their rigs.
"Over the last month, the total number of active oil rigs in the U.S. has fallen by more than 35 percent, highlighting the impact that the current low oil price is having on drilling activity. This drilling slowdown will translate into lower production in the coming months,” ING’s Warren Patterson and Wenyu Yao said in a research.
Meanwhile, new figures showed the damage to global trade caused by the virus.
The Dow Jones Industrial Average fell more than 2% minutes after opening down 147.39 points, or 0.61%, at 24,095.10.
The S&P 500 opened lower by 28.94 points, or 1.01%, at 2,845.62, while the Nasdaq Composite dropped 96.77 points, or 1.12%, to 8,553.38 at the opening bell.