Seconds after the market opening on Sunday evening, the oil prices crashed up to 30%, bringing crude oil to its lowest price in 4 years.
Brent crude dropped from $45 a barrel to just $31.52, the biggest one day drop on record. It has since recovered a little, and at time of writing stands at $35.42 a barrel, which is still down more than 20% since trading started.
Goldman Sachs have warned that the price of oil could dip to as low as $20 a barrel in the coming weeks.
Saudi Arabia is refusing to make deeper cuts to oil output despite the corona virus outbreak causing a weakening demand in oil.
Instad, Saudi Arabia has RAISED outputs and is offering oil at unprecedented price discounts – while the looming threat of corona virus causing a worldwide pandemic, which would weaken demand for transport and fuel.
“It’s the most crude price-bearish combination since the early 1930s. The price collapse has just begun” said Bob McNally at the Rapidan energy Group to FT.
The markets are not responding well to the news. The Norwegian Krone has fell 3.2% to it’s lowest levels since 1985 against the US dollar, while the US dollar dropped half a percent against international peers.
Dow futures were down more than 1 000 points and S&P emini futures were down more than 4% in early trading, going as low as 2 845.
Gold on the other hand spiked to above $ 1 700 for the first time since 2012.