OIL prices collapsed on yesterday as crude oversupply and the coronavirus pandemic’s economic upheaval drowned markets.

New York’s benchmark WTI plunged 24% to US$20.37 (RM90), its lowest price since 2002, while London’s Brent North Sea oil hit its lowest mark since 2003, slumping 14% to end trading at US$24.67.

Crude has repeatedly hit record lows in recent days as the global economy flirts with recession caused by travel restrictions and business closures brought on by the virus, along with a price war between major producers Saudi Arabia and Russia.

Global stock and oil markets plunged yesterday, as vast stimulus measures failed to offset heightened concerns that the worsening coronavirus outbreak will tip the world into a deep recession. 

On Wall Street, the Dow Jones Industrial Average was hit by another brutal loss to finish below the 20,000-point level for the first time since 2017 despite authorities in the US and elsewhere moving forward with more measures to prop up the economy.

In European trading, both Paris and Frankfurt slumped more than 5% while London gave up 4%, following Asian markets lower.

“It is unclear what will calm investors’ concerns, if there is anything at all,” said market analyst Connor Campbell at Spreadex.

“Huge stimulus packages have already been announced, and no doubt there will be plenty more to come.”

Officials in Washington are preparing a US$1.3 trillion stimulus package that includes deferrals on tax payments and loans for small businesses pummelled by the economic shutdown as well as immediate cash payments to all Americans.

US President Donald Trump said at a midday briefing that the Department of Housing and Urban Development will provide relief to renters and homeowners by suspending all foreclosures and evictions until the end of April.

British finance chief Rishi Sunak unveiled an “unprecedented package” of government loans worth £330 billion (RM2.04 trillion), while France and Spain announced tens of billions of euros in aid.

Yet most market commentators agree that the virus-wracked world economy will likely enter into recession – which means a minimum of two successive quarters of economic contraction.

“From what we see from the markets’ reaction, massive monetary and fiscal measures deployed are not thought to be enough to prevent economies from plunging into recession,” Swissquote Bank analyst Ipek Ozkardeskaya told AFP. 

A note from JPMorgan Chase projected US activity would shrink 14% in the second quarter, while Europe’s output would plunge 22%.

“These outcomes are worse than were recorded during the global financial crisis or the European sovereign crisis,” the note said of the second quarter.

The moves by governments followed central bank interest rate cuts and pledges to make cash available to stop financial markets from jamming up. – AFP, March 19, 2020.