Oil prices slide in Covid-19 lockdown-driven rout

Oil prices slide in Covid-19 lockdown-driven rout

Both main oil contracts fell 5%, extending this week's meltdown to plumb four-month lows on coronavirus-driven demand fears

Representative image/Credit: iStock images

Oil prices dived on Thursday on demand fears as more nations go into lockdown to staunch the spread of the coronavirus, while stock prices enjoyed a reprieve.

Both main oil contracts fell five percent, extending this week's meltdown to plumb four-month lows on virus-driven demand fears.

"The new lockdowns have since yesterday caused a carnage in the oil market," Bjornar Tonhaugen, head of oil markets at Rystad Energy.

"Oil demand will lose ground as a result of the new lockdowns... Prices now naturally decline on this grim prospect," he added.

Meanwhile, stocks were spared Wednesday's bloodbath which saw losses of more than three percentage points in several major markets.

Wall Street opened mixed after data showed the US economy posting the strongest recovery on record as it expanded at an annual rate of 33.1 percent in the third quarter, according to government data.

However, compared to the July-September of 2019, the third quarter contracted 2.9 percent after falling 9.0 percent year-over-year in the second quarter, according to the data.

The Dow shed 0.2 percent as trading began.

In early afternoon deals, European stocks slid and the euro sagged as the European Central Bank kept rates steady as expected, although it said it stands ready to bolster its pandemic response in December.

European equities were hammered Wednesday as the German and French governments unveiled tighter restrictions to curb soaring Covid-19 infection rates.

The moves followed weeks of exponentially rising new infections across Europe that forced governments across the continent to put fresh containment measures in place.

The deadly second wave could potentially spark another painful global recession, as businesses and economies buckle once more under the restrictions, analysts warn.

"Risks of a double-dip recession are rising for the global economy," warned Agathe Demarais, global forecasting director at The Economist Intelligence Unit.

"A second wave of the coronavirus pandemic is raging across Europe, prompting several countries, including heavyweights France and Germany, to re-impose stringent measures to contain the outbreak," she told AFP.

In tumultuous Wednesday trade, Frankfurt stocks dived more than four percent, while London and Paris each slumped by around three percent.

"Looking ahead, the prospects for the global economy have darkened for the rest of the year," Demarais added.

"Many major economies will likely see their GDP contract on a quarterly basis in October-December. In turn, the recovery... will take even longer than planned."

In London on Thursday, investors shrugged off news that British bank Lloyds and oil giant Royal Dutch Shell both rebounded into profit in the third quarter.

Paris digested news that European aircraft maker Airbus flew into the losses on exceptional charges linked to the deep job cuts, as virus fallout ravaged the aviation sector.

Frankfurt was partly helped by news that German auto giant steered back into profit in the same period, after negotiating pandemic fallout.

London - FTSE 100: DOWN 0.1 percent at 5,576.54 points

Frankfurt - DAX 30: DOWN 0.1 percent at 11,545.01

Paris - CAC 40: DOWN 0.6 percent at 4,544.21

EURO STOXX 50: DOWN 0.7 percent at 2,941.53

New York - Dow: DOWN 0.2 percent at 26,478.84

Tokyo - Nikkei 225: DOWN 0.4 percent at 23,331.94 (close)

Hong Kong - Hang Seng: DOWN 0.5 percent at 24,586.60 (close)

Shanghai - Composite: UP 0.1 percent at 3,272.73 (close)

Euro/dollar: DOWN at $1.1708 from $1.1746 at 2100 GMT

Dollar/yen: UNCHANGED at 104.32 yen

Pound/dollar: DOWN at $1.2933 from $1.2983

Euro/pound: UP at 90.51 pence from 90.47 pence

West Texas Intermediate: DOWN 5.8 percent at $35.22 per barrel

Brent North Sea crude: DOWN 5.6 percent at $36.93.

Get a round-up of the day's top stories in your inbox

Check out all newsletters

Get a round-up of the day's top stories in your inbox