HOw much lower
Article from today's Globe and Mail.
https://www.theglobeandmail.com/report-on-business/top-business-stories/as-oil-prices-skid-again-panic-is-beginning-to-set-in/article22060567/
Oil, markets sink
As analyst Alastair McCaig puts it this morning, “panic is beginning to set in” across financial markets as the collapse in oil prices deepens.
His comments came as equity and currency markets faced fresh turmoil, with crude slipping further below the $60-a-barrel mark on a new price forecast and more economic signals from China. Iran’s oil minister added fuel to the fire with his suggestion that there may be $20 to go still where crude is concerned.
Stock prices are sinking, while the Canadian dollar plumbs new depths.
“With the Iranian oil minister Bijan Namdar Zangeneh now stating that he can see oil being squeezed down to $40 a barrel, panic is beginning to set in,” said Mr. McCaig of London-based IG.
“Overnight, Chinese industrial figures continued to soften, encouraging BHP Billiton to lower its expectations for Chinese steel consumption and alter its production levels accordingly,” he added.
On top of that, the International Energy Agency today cut its projections for demand for oil next year.
Investors reacted to all this by fleeing.
Japan’s Nikkei actually gained 0.7 per cent, but stock prices are plunging in Europe and are poised to sink in North America.
London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were down by between 1.1 per cent and 1.4 per cent by about 7:30 a.m. ET.
S&P 500 and Dow Jones industrial average futures were also down, while Toronto’s S&P/TSX composite appeared similarly headed for a weak open.
The Canadian dollar, whose fortunes are tied to the price of oil, touched a low of 86.28 cents U.S. The high wasn’t all that much higher, at 86.80 cents.
Oil prices have staged a stunning decline since the summer, plunging by 45 per cent and knocking oil-dependent economies like Norway and Russia, whose currencies, like the Canadian dollar, are under exceptional pressure.
Big oil companies – Canada’s Cenovus Energy Inc. is but one – are slashing spending while economists fast revise their forecasts for economic growth.
And the rout has taken its toll on shares of energy companies across the globe.
“It's been another bad week for energy stocks, with oil prices falling more than 9 per cent as OPEC - which accounts for one third of global oil production - cut its 2015 demand forecasts to the lowest in more than a decade, while at the same time its most influential member, the Saudis, continued to deny that there would be any slowdown in production,” said market analyst Craig Erlam of Alpari.
“It's a battle over market share at the moment and no one wants to back down. The supply glut in the oil market saw inventories in the U.S. grow again this week, helping to further weigh on oil prices. The decline in oil prices is showing no signs of slowing which would suggest that $50 a barrel is quite likely, and soon.”