American Oil Hits Minus $40 Per Barrel
NEW YORK (Kayhan Intl.) -- Wall Street retreated for a second straight day on Tuesday as a collapse in U.S. crude prices and glum annual forecasts by companies foreshadowed the biggest economic slump since the Great Depression due to the coronavirus outbreak.
With the collapse spilling into June futures contracts, investors became wary of the extent of the economic damage from sweeping lockdown measures that have halted business activity and sparked millions of layoffs.
With many sectors facing the risk of a collapse, investors are looking to first-quarter earnings reports for the impact of the health crisis on Corporate America after big U.S. banks set the stage with dismal outlooks for 2020.
"What we’re hearing about is a quarter that’s in the rear-view mirror, but also do not know what the future holds in the second quarter, which is probably going to be worse,” said Art Hogan, chief market strategist at National Securities in New York.
U.S. jobless claims hit 22 million in the past month as companies launched dramatic cost-saving measures to ride out the slump, and readings of U.S. business activity surveys, due Thursday, are likely to plummet to recession-era lows.
Oil futures for June plunged to near two-decade lows on Tuesday, as the panic that sent U.S. May futures to below minus $40 per barrel on Monday bled further into the markets due to worries about the coronavirus pandemic’s effect on fuel demand in a market overrun by supply.
U.S. crude futures slumped in dramatic fashion on Monday, with the front-month May contract, which expires Tuesday, settling at negative $37.63 a barrel. That steep fall came as traders scrambled to get out of the contract to avoid taking delivery of barrels for fear of nowhere to store the oil and lack of customers who want to buy it.
U.S. President Donald Trump on Tuesday called on the government to make funds available to the U.S. oil and gas industry, calling Monday’s crash a "financial squeeze” and mooting a halt to Saudi imports.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, have announced sweeping cuts in production, amounting to almost 10% of global supplies. But with economies virtually at a standstill due to coronavirus lockdowns, demand has dropped as much as 30%.
The collapse in prices has threatened to tilt the once-booming U.S. oil industry into bankruptcy.
With the collapse spilling into June futures contracts, investors became wary of the extent of the economic damage from sweeping lockdown measures that have halted business activity and sparked millions of layoffs.
With many sectors facing the risk of a collapse, investors are looking to first-quarter earnings reports for the impact of the health crisis on Corporate America after big U.S. banks set the stage with dismal outlooks for 2020.
"What we’re hearing about is a quarter that’s in the rear-view mirror, but also do not know what the future holds in the second quarter, which is probably going to be worse,” said Art Hogan, chief market strategist at National Securities in New York.
U.S. jobless claims hit 22 million in the past month as companies launched dramatic cost-saving measures to ride out the slump, and readings of U.S. business activity surveys, due Thursday, are likely to plummet to recession-era lows.
Oil futures for June plunged to near two-decade lows on Tuesday, as the panic that sent U.S. May futures to below minus $40 per barrel on Monday bled further into the markets due to worries about the coronavirus pandemic’s effect on fuel demand in a market overrun by supply.
U.S. crude futures slumped in dramatic fashion on Monday, with the front-month May contract, which expires Tuesday, settling at negative $37.63 a barrel. That steep fall came as traders scrambled to get out of the contract to avoid taking delivery of barrels for fear of nowhere to store the oil and lack of customers who want to buy it.
U.S. President Donald Trump on Tuesday called on the government to make funds available to the U.S. oil and gas industry, calling Monday’s crash a "financial squeeze” and mooting a halt to Saudi imports.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, have announced sweeping cuts in production, amounting to almost 10% of global supplies. But with economies virtually at a standstill due to coronavirus lockdowns, demand has dropped as much as 30%.
The collapse in prices has threatened to tilt the once-booming U.S. oil industry into bankruptcy.
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