LONDON: Alarm bells rang across world markets on Monday as a near 9 per cent dive in China shares and a sharp drop in the dollar and major commodities panicked investors. European stocks were almost 3 per cent in the red and Wall Street was braced for similar losses after Asian shares slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand. Oil slumped another 4 per cent, while safe-haven government US an German bonds and the yen and the euro rallied as widespread fears of a China-led global economic slowdown and currency war kicked in.
With oil moving back above $60 a barrel today for the first time in 2015, perhaps marking the end of the price collapse that began last June. But does the rally reflect increased optimism over global demand or supply constraints? Or could the answer be, neither?
NEW YORK: World stock markets plunged on Monday, as a near 9 per cent dive in China shares and a sharp drop in the dollar and major commodities sent investors rushing for the exit. The Dow Jones Industrial Average dropped more than 1,000 points as Wall Street opened, and the benchmark Standard & Poor's 500 index slid more than 2.5 per cent, a drop that puts it nearly 10 per cent below its record high.
Oil extended its decline after the biggest weekly drop since March as investors weighed the prospects of Iran increasing crude exports in an oversupplied market.
U.S. and Iranian diplomats are digging in over the last remaining issues holding up an historic nuclear deal, casting doubt on earlier optimism that an accord could be announced as early as Monday. Saudi Arabia told OPEC it raised oil production to a record. The euro fell against the dollar after Greece’s bailout agreement.
Brent crude oil rose more than $1 to a 12-week high on Thursday after news of a sharp cut in Saudi oil production, an explosion in Yemen that halted most of the country’s oil exports and bullish Chinese trade data.
Saudi Arabia cut its crude oil production by around 700,000 barrels a day (bpd) over the last two months of last year, with December output at around 9.0 million bpd, an industry source familiar with Saudi oil policy said.
VIENNA: Oil group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports. OPEC members said that they were comfortable with the market, and that the trend was positive. They said that they believe its important to adhere to maintain output ceiling.
The days when OPEC members could all but guarantee consensus when deciding production levels for oil are long gone, according to a veteran of almost two decades of the group’s meetings.
The global glut of crude, which has contributed to a 30% decline in prices since June 19, has left the Organization of Petroleum Exporting Countries disunited and dependent on non-members to shore up the market, said former Qatari Oil Minister Abdullah Bin Hamad Al Attiyah. The 12-member group is set to meet in Vienna on Nov. 27.