Investors continue to stampede out of oil, creating a cascade effect to bring the price down. At this rate, we will probably test the previous lows from 2016 that were within the $20 range:
Oil prices plunged nearly 7 percent on Monday, in line with another decline across global stock markets, which came under pressure from concern about a U.S. government shutdown and a worsening world economy.
The U.S. Senate has been unable to break an impasse over U.S. President Donald Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan. 3.
Investors have flocked to perceived safe-haven assets such as gold and government debt, at the expense of crude oil and stocks.
The price of oil has already fallen by about 40 percent from October highs to its lowest since the third quarter of 2017, as investors have grown increasingly wary of the impact to global growth, and crude demand, from an escalating trade dispute between the United States and China.
The macroeconomic picture and its impact on oil demand continue to pressure prices. Global equities have fallen nearly 9.5 percent so far in December, their biggest one-month slide since September 2011, when the euro zone debt crisis was unfolding.
The trade dispute between the United States and China and the prospect of a rapid rise in U.S. interest rates have brought global stocks down from this year’s record highs and ignited concern that oil demand will be insufficient to soak up any excess supply.