Oil drops 9% on economic worries, falling stocks
By Polya Lesova & Moming Zhou
Oil futures plunged 9% Monday, pressured by falling global equity markets, strength in the U.S. dollar and comments that OPEC may not cut production further at its upcoming meeting.
Crude oil for April delivery traded down $3.94, or 8.8%, to $40.82 a barrel.
Earlier, oil prices tumbled as low as $40.64 a barrel on Globex, posting their biggest loss since Jan. 27.
Oil prices fell "as global equity markets slumped and comments by an OPEC member suggest there may not be more cuts in March," said Brenda Sullivan, an analyst at Sucden Financial Research, in a report.
On Wall Street, U.S. stocks fell sharply, with the Dow Jones Industrial Average ($INDU:
6,840.08, -222.85, -3.2%) dropping below 7,000 for the first time in 11
years. Financial giants American International Group (AIG:
0.48, +0.06,
+13.6%) and HSBC Holdings (HBC:
27.79, -7.01, -20.1%) took moves to raise
more capital. Equity markets in Asia and Europe also posted losses.
In currency markets, the euro lost ground versus major rivals Monday after European Union leaders refused over the weekend to consider a coordinated bail-out package for troubled Eastern European economies. See Currencies.
The U.S. dollar index (DXY:
88.88, +0.87, +1.0%) , which measures the
currency against a trade-weighted basket of six global counterparts, rose to 88.81 in recent trade, up from 88.166 late Friday.
Iran's oil minister said Sunday that the Organization of the Petroleum Exporting Countries has no plans to cut its oil production again at its March 15 meeting, Dow Jones Newswires reported, citing Iranian media.
The comments differ from statements from other OPEC members that have indicated recently more production cuts are coming. The cartel already has announced an output reduction of 4.2 million barrels a day since September, equivalent to about 5% of global oil demand.
Also on Monday, April reformulated gasoline fell 7 cents, or 5%, to $1.31 a gallon and April heating oil dropped 9 cents, or 7%, to $1.18 a gallon.
source : marketwatch
