The continuing drop in crude oil prices is causing losses for investors and deepening the economic crisis worldwide.
Stocks nosedived for a second day Tuesday, following a further drop in oil futures.
Major market indexes also recorded losses at closing Tuesday.
The Dow Jones Industrial Average dropped 632 points, or 2.7%, to finish near 23,019. The S&P 500 lost 87 points, or 3.1%, to close near 2,737. The Nasdaq Composite ended near 8,263, having lost 297 points, or 3.5%.
In Europe, London’s FTSE exchange ended down 3%, while the CAC-40 in Paris and Frankfurt’s DAX index both closed down nearly 4%.
Tuesday’s drop began in Asia, with Japan’s Nikkei index losing 1.9% at the closing bell, while Australia’s S&P/ASX dropped 2.5%, the Hang Seng in Hong Kong fell 2.2%, and Seoul’s KOSPI lost a full 1%. Shanghai’s benchmark closed down nearly a point.
With ground and air transportation almost at a standstill in some places, there is a glut of oil on the market with buyers hard to find. Oil producers are struggling to find enough storage.
In the U.S., benchmark crude oil for June delivery fell $8.86, or 43.4%, to close at $11.57 a barrel Tuesday. Brent crude oil, the international standard, fell $6.24, or 24.4%, $19.33 a barrel.
U.S. President Donald Trump said Monday the U.S. could buy oil to fill up its national strategic oil reserve.
"This is a great time to buy oil ... nobody's ever heard of negative oil before," he said.
On Tuesday, he tweeted, “We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy (Dan Brouillette) and Secretary of the Treasury (Steven Mnuchin) to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!”
With millions of businesses across the globe closed because of the pandemic, oil experts say the world demand for oil is down by a third, as the coronavirus wreaks havoc on national economies, including in the U.S, where 22 million workers have been laid off.
Nine days ago, the 13-nation Organization of the Petroleum Exporting Countries and its oil-producing allies agreed to cut their production by 9.7 million barrels a day starting May 1, extending through June, an effort aimed at propping up world prices.
But the agreement has had no effect on ending the free fall in global oil prices. Now, Saudi Arabia, the lead OPEC exporter, and other countries are considering cutting their production as soon as possible, rather than waiting until May 1.
