March 9, 2020

Oil Prices and Global Stocks Plunge

By Newsroom

Oil prices plunged by as much as 30% on  Monday amidst fears of an all-out price war after Saudi Arabia slashed prices and is preparing to ramp up production.

West Texas Intermediate plunged 22%, or US$9.15, to trade at $32.13 per barrel.  The international benchmark, Brent Crude was trading at  $35.52 per barrel.

Taken into a local context the Trinidad and Tobago 2019/2020 Budget was pegged on an oil price of US$60 a barrel.

”Over the weekend, two of the world’s major oil producers Saudi Arabia and Russia added a new element to the mix by setting off a price war for crude. While low oil prices can be beneficial, they can also disrupt economies that depend heavily on petroleum dollars,” the NY Times reported.

“Oil lost nearly a quarter of its value in futures markets on Monday, dragging shares of energy companies lower. It was what one analyst called “another acute shock to markets,” the newspaper reported.

The fall in oil prices since the start of the coronavirus also signals a global economic slowdown which is reflected in the global stock markets.

Investors already were on edge about the mounting costs of the virus outbreak that has disrupted world travel and trade.

China reported Saturday that its exports fell 17% and imports were off 4% in January and February after Beijing shut factories, offices and shops in the most severe anti-disease measures ever imposed.

The main stock indexes in London and Frankfurt dropped by more 8%. Tokyo closed down 5.1% while Sydney lost 7.3% and Shanghai was off 3%.

Wall Street futures prices were following suit, pointing to declines of around 5% when U.S. markets open.

  They are entering Bear market territory, according to financial analysts.  Bear markets are rare and are sometimes seen as an indicator of tougher economic times to come. 

Photo by Gregory Bull, AP File Photo.
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