US oil futures fell to a penny a barrel, their worst level since the NYMEX opened oil futures markets in 1983. Monday’s fall comes after prices hit an 18-year low last week as markets realized that record production declines agreed by OPEC, Russia and other producer countries are not enough to make up for the loss in demand.
“It didn’t take long for the market to recognize that the OPEC + deal, in its current form, will not be enough to balance the oil markets,” wrote Stephen Innes, chief global market strategist at AxiCorp, in a research note.
US oil futures for June fell more than 12% to $ 21.87. Brent, the global benchmark, fell 3.9% to just under $ 27 a barrel.
Meanwhile, London FTSE 100 ((UKX) and from Germany DAX ((DAX) opened slightly higher, but France CAC 40 ((CAC40) was slightly negative.
Europe’s lukewarm opening followed a difficult day in Asia, where Japan Nikkei 225 ((N225) closed nearly 1.2% lower, the country said exports fell sharply last month while the coronavirus weighed on economic activity. South Korea Kospi ((KOSPI) finished 0.8% lower after struggling for management most of the day.
Hong Kong’s Hang Seng Index ((HSI) finished down 0.2%, while China Shanghai composite ((SHCOMP) closed 0.5% higher. The People’s Bank of China lowered its one-year prime rate by 20 basis points to 3.85% on Monday. The rate cut was widely expected after the central bank cut another key rate last week.
Dow ((UNDUE) Futures contracts, meanwhile, fell 235 points, or around 1%. S&P 500 ((SPX) futures fell 0.9% and Nasdaq ((COMP) futures contracts fell 0.6%.
Last week, Wall Street recorded its second week of consecutive gains. Investors seemed optimistic about a potential treatment for coronaviruses and discussions about reopening part of the US economy. The increase came despite a disastrous report on China’s GDP and news that 22 million Americans have filed initial unemployment claims in the past four weeks.
The coming week will bring more information on how large US companies have been affected by the coronavirus pandemic, such as Netflix ((NFLX), Delta Airlines ((DAL) and Chipotle ((CMG) report income for the first three months of 2020.
But it could also bring relief to small businesses across the country. Treasury Secretary Steven Mnuchin told Jake Tapper of CNN that an agreement with Democratic leaders of Congress could be reached on Sunday to provide billions of dollars more to small businesses through the paycheck protection program.
-— Julia Horowitz contributed to this report.