US oil futures sink to their lowest level in 20 years

oil prices falling

US oil futures plunged during Asian trading hours Monday as the oil market continues to be roiled by an epic collapse in demand caused by the coronavirus crisis.

Meanwhile, Asian markets were mixed in morning trade.

 US stock futures declined.

US oil futures were last down nearly 15% to $15.54 a barrel, though had early plummeted as low as $14.47 — their worst levels since 1999.

Monday’s crash comes after US oil fell to an 18-year low last week as markets realized the record-setting OPEC+ output cuts aren’t nearly enough to offset the loss in demand. 

Futures for Brent, the global benchmark, slumped 1.6% to $27.63 a barrel.”It hasn’t taken long for the market to recognize that the OPEC+ deal will not, in its present form, be enough to balance oil markets,” wrote Stephen Innes, chief global markets strategist at AxiCorp, in a Monday research note.

He added, though, that Russia and Saudi Arabia have hinted that more production cuts could be on the table, which might support prices.

In Asia, Japan’s Nikkei 225 (N225) declined 1% as the country reported that exports fell sharply last month while the coronavirus weighed on economic activity. 

Other major indexes barely budged. Hong Kong’s Hang Seng (HSI) edged up 0.2% in early trade, while South Korea’s Kospi (KOSPI) seesawed between small gains and losses. China’s Shanghai Composite (SHCOMP) inched slightly higher.

The People’s Bank of China on Monday cut its one-year Loan Prime Rate by 20 basis points to 3.85%. The cut to the rate — which was introduced last year to gradually replace the fixed benchmark lending rate and make it easier for companies to borrow money — was widely expected after the central bank cut another key lending rate last week.

Dow (INDU) futures, meanwhile, were last down 105 points, or around 0.4%. S&P 500 (SPX)futures dropped 0.4% and Nasdaq Composite (COMP) futures fell 0.2%. 

Last week, Wall Street logged its second-straight week of gains. Investors appeared optimistic about a potential coronavirus treatment and discussions about reopening parts of the US economy. The surge came despite a dire GDP report from China and news that 22 million Americans have filed initial unemployment claims in the past four weeks.

The coming week will bring further information on how major US corporations have been affected by the coronavirus pandemic, as companies including Netflix (NFLX), Delta Air Lines(DAL) and Chipotle (CMG) report earnings for the first three months of 2020. 

But it could also bring needed relief for the country’s smaller businesses. Treasury Secretary Steven Mnuchin told CNN’s Jake Tapper that an an agreement with Democratic congressional leaders could be reached Sunday to provide billions of dollars more to small businesses through the Paycheck Protection Program.