International oil prices drop to lowest since mid-1999

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International oil prices continued to fall because of the coronavirus pandemic, with Brent crude dropping to its lowest in more than two decades.

The international oil marker fell as much as 17 per cent in Asian trade to $15.98 a barrel, the lowest point since mid-1999, before recovering slightly to sit around $17 as European markets opened.

Prices are down by about 40 per cent this week. The decline in Brent follows a plunge in the price of the US marker West Texas Intermediate, which this week fell into negative territory for the first time.

Lockdowns and travel restrictions across the world’s major economies to contain the spread of Covid-19 have caused demand for crude to evaporate.

The drop in WTI prices came as producers were forced to pay buyers to take oil off their hands ahead of the expiry of futures contracts. Traders are concerned about lack of space to store physical oil in the main transit point of Cushing, Oklahoma.

In early trading in Europe, the price of WTI for June delivery was 3.5 per cent lower at $11.19 a barrel after plunging by more than 40 per cent a day earlier. Contracts for May delivery dropped as low as minus $40 a barrel on Monday.

Meanwhile, European stocks opened higher after falling the previous day. The Stoxx Europe 600 added 0.9 per cent in early trading, with gains of 0.8 per cent and 1.2 per cent respectively for London’s FTSE 100 and Frankfurt’s Dax 30.

Asian markets mostly showed improvement, with the Hang Seng in Hong Kong adding 0.4 per cent and China’s CSI 300 index of Shanghai and Shenzhen-listed stocks rising 0.8 per cent.

Japan’s benchmark Topix fell 0.6 per cent while Sydney’s S&P/ASX 200 closed flat. Futures markets tipped the S&P 500 to gain 0.8 per cent when trading begins later in the day.

In fixed income, the yield on the 10-year US Treasury was 0.566 per cent.


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