World shares skid after oil prices ‘plunge’ below zero
Demand collapsing as pandemic leaves factories, automobiles, airplanes idle
BANGKOK, April 21, (AP): World share prices skidded Tuesday after the price of US crude oil plunged below zero, with demand collapsing as the pandemic leaves factories, automobiles and airplanes idled.
Germany’s DAX lost 2.2% to 10,443.42 in early trading and the CAC 40 in France shed 2.4% to 4,420.53. Britain’s FTSE 100 declined 1.5% to 5,724.68.
Wall Street looked set for losses, with the future contract for the S&P 500 down 0.6%, while the contract for the Dow industrials lost 1%.
While share prices have gradually stabilized after wild swings earlier this year, uncertainty over growing numbers of coronavirus cases in Japan and in some Southeast Asian countries has left investors wary.
Unconfirmed reports Tuesday that North Korean leader Kim Jong Un was in fragile condition after surgery added to the jitters. But South Korea’s government said Kim appeared to be handling state affairs as usual.
Overhanging the markets has been the plunging price of crude oil as a growing glut pushes storage capacity to its limits. As of early Tuesday, the cost to have a barrel of US crude delivered in May was at negative 2.58 per barrel.
That was still an improvement over the US benchmark’s settlement at negative $37.63 per barrel on Monday. Traders are still paying about $20 per barrel for US oil to be delivered in June. Analysts consider that to be closer to the “true” price of oil.
The tumult in the oil market mirrors volatility in many others and reflects uncertainty over where the world economy will head as governments begin to loosen controls imposed to contain the coronavirus.
“We could merely be in the eye of the hurricane as the epicenters of its rage remain centered around demand devastation and crude oil oversupply,” Stephen Innes of AxiCorp. said in a commentary.
“At a minimum, oil prices will be the last asset class to recover from lockdown” and only when travel restrictions are lifted, he said.
When trading of contracts for US oil to be delivered in May expire on Tuesday, the earliest delivery available will be for June.
On Tuesday, it was down 28 cents at $20.15 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, dropped $2.91 to $22.66. It fell nearly 9% on Monday to $25.57 per barrel.
“The historic drop in WTI prices is an indication of the downward pressure which many other crude oil