European stock markets slumped Tuesday after US oil prices crashed back below zero as the coronavirus crisis wipes out global crude demand and sparks a vast supply glut.
In early morning deals, London’s benchmark FTSE 100 index tumbled 1.7 percent to 5,713.70 points, Frankfurt’s DAX erased 2.0 percent to 10,462.56 and the Paris CAC 40 also shed 2.0 percent to 4,437.84 compared with Monday’s close.
US benchmark light sweet crude West Texas Intermediate for May delivery had climbed back into positive territory during Asian trading after having closed at -$37.63 in New York.
But it sank back below zero to stand at -$4.51 per barrel as trading began in Europe.
The massive sell-off came ahead of the expiry of the May futures contract later Tuesday, when those holding the contract will have to take physical delivery of the oil.
“Ever thought that it could be imaginable to see the price of US oil valued at less than a pizza? Or even a slice of pizza? How about for it to actually cost to sell US crude?” said Jameel Ahmad, global head of currency strategy and market research at trading firm FXTM.
“All of this was previously thought to be unthinkable — but it became very real for traders as the price of US oil turned negative for the first time in history.”
Source: AFP
