The Dow Jones was down by more than 2 % at the close of Wall Street on Wednesday along with poor showings on most indexes after a day in which the 2016 US stocks sell off intensified continuing a turbulent start to the year.
Traders are looking askance at the main cause of the problem … that’s the tumbling price of oil.
Brent crude which is used as an international benchmark, briefly fell below the $30 a barrel mark for the first time since April 2004 before slightly recovering.
Over the past 15 months oil prices have in general fallen by 70%.
Over supplies of the black gold plus concerns about a China slowdown are ringing alarm bells for national economies only just crawling out of recession.
Morgan Stanley joined Goldman Sachs in saying oil prices could dip to $20, and a number of major banks cut their crude cost outlook this week. Standard Chartered even raised the spectre of $10 oil.
Winners when oil is cheap
* Airlines, air travellers
Reductions in the cost of jet fuel saved the world’s airlines $89 billion US in 2015, according to the International Air Transport Association a trend that seems likely to continue. Some of those savings are being passed along to travellers.
- Drivers, auto industry : Low oil prices translate into savings at the pump.
- Oil-consuming countries
“Globally, economies that are net consumers of oil are also expected to benefit,” said one expert , citing Japan, the eurozone and even the U.S.
Losers when oil is cheap
Morgan Stanley joined Goldman Sachs in saying oil prices could dip to $20, and a number of major banks cut their crude cost outlook this week. Standard Chartered even raised the specter of $10 oil.