The cost of Brent crude oil has hit its lowest level since November 2002 as financial markets eye deepening economic damage from the coronavirus crisis.
The price fell more than 9% overnight and early on Monday, to below $23 a barrel. Just before 5pm UK time, it was down 11.5% at $22.06 a barrel.
Market experts said it reflected concerns that demand would remain muted for longer as a growing number of countries globally enter lockdown conditions in a bid to slow COVID-19 infections – with the UK warning of likely restrictions for up to six months.
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Donald Trump has also backtracked on his hope that the US could start to go back to work after the Easter holiday.
The oil price collapse is linked too to a bitter price war between major producers Russia and Saudi Arabia, following Moscow’s failure to back output cuts in support of prices – bolstering fears of a renewed supply glut.
At the same time, a sharp reverse on world stock markets has seen an estimated $15trn (£12.1trn) erased from values in the year to date.
Asian stocks were mostly lower on Monday – the Nikkei in Japan almost 4% down at one stage – though Australia’s main index made gains of 7% on the back of a AUS$130bn (£65bn) wage support package announced by the government.
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A wave of stimulus from central banks and national governments has had only a limited effect on market confidence given the unprecedented nature of the crisis and uncertainty over its economic consequences.
The FTSE 100 in London – 27% down on where it started the year – was up by 0.9% when it closed.
EasyJet shares were 9% down at one stage after it confirmed the phased grounding of its fleet had been completed. They closed down 7.6%.
Hammerson, the owner of UK shopping centres including Birmingham’s Bullring, said it had received only 37% of the rent that had been due this month as retail reels from the lockdown conditions.
It said: “We have received a variety of requests for rent deferrals, monthly payments and waivers, which we are reviewing on a case-by-case basis, taking into account the business model and risk profile of the occupier, alongside the aid made available by the relevant governments.”
Mothercare said its UK administration last year was proving “invaluable” experience for the virus crisis.
It said 430 employees in the country had been sent home.
The Department for Transport also confirmed that First Group’s Great Western Railway had been given a new three-year franchise extension – with Southeastern, owned by Govia, securing a new two-year deal.
The move was aimed at ensuring “those who need to can continue to travel and will provide certainty for staff working on the railways,” a spokesperson said.
SOURCE : https://news.sky.com/story/coronavirus-oil-costs-hit-2002-low-as-markets-digest-surge-in-infections-11965511