Irresponsible. Say goodbye to OPEC Plus and maybe farewell to many shale producers as oil prices crash after Russian decided not to go along with OPEC Cuts. So in an irresponsible move, Saudi Arabia lashed out at Russian insurance going after the customer and cutting oil prices.
S&P 500 futures touched price limit down at 2819 down -148 points (-5%) Sunday evening as of this writing. The markets are spooked by corporate earnings slowing from coronavirus and the new oil trade war clash between prominent OPEC members Russia and Saudi Arabia.
Yesterday oil prices gave up gains as it appeared that talks between OPEC Plus and Russia had broken down over production cuts. The OPEC Joint Ministerial Monitoring Committee (JMMC) had recommended a production cut of 1.2 million barrels, but Russia was playing footsie.
It seemed that after the Fed shocked the market with a 50 basis point rate cut, there was panic on Wall Street. It appeared the market took the surprise cut as an act of desperation and a sign that perhaps things are a lot worse in the economy than what had already priced in.
Global stock markets after plunging on the night session and then the open rebounded strongly. A report from Bank of Japan Governor Haruhiko Kuroda said the central bank would take necessary steps to stabilize financial markets.
Oil prices are falling out of control as fears continue to spread that coronavirus is out of control. While a cut off of 500,000 barrels a day oil export by Saudi Arabia to China, and a commitment by OPEC to meet March 5th and 6th to try to stabilize the market.
Oil Price traded into the $47 a barrel handle as it reports that the coronavirus hit 47 countries. Coincidence? I think not. The spread of the virus is spreading not only fear but oil demand destruction and horror thinking about potential demand destruction to come.
Global oil markets are still struggling to find the thin line between horror and reality. Global markets plunged off worries that the coronavirus could turn into a worldwide pandemic creating a panic selloff that defied current realities
Virus scare pandemic that we have all worried about. Fear is beyond reason and it is reasonable to be fearful. Concerns of the virus spreading around the globe and fears of more oil demand destruction as cities are shut down.