Falling oil prices have once again whacked a tentative recovery on Wall Street Tuesday, meaning the ASX will start on a weak footing today.
Australian oil stocks such as Woodside, Oil Search, Beach and Origin Energy will be watched closely. they all fell on Tuesday.
After trading in the green for most of the session, the Dow joined the S&P 500 and Nasdaq in negative territory for a while, then started clawing their way back into positive territory in the last few minutes of trading. But by the close only Nasdaq was in the green – by just 0.1 point.
The ASX 200 futures trading closed up by just a point, so it will be a weak start today that will be dominated by wages and consumer confidence reports later this morning. The former will have a big bearing on interest rates.
But the sliding oil price will be the major influence after US West Texas Intermediate crude futures fell to their lowest settlement in nearly a year, losing around 7% to settle $US55.69 a barrel in New York.
“It’s like a run on the bank,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “It’s getting to the point where it doesn’t seem to be about fundamentals anymore, but a total collapse in price,” Reuters reported.
The price continued falling in early Asian trading, lopping and was down more than 8% at $US55.30.
The fall on Tuesday was the 12th daily fall in a row, the longest such streak since 1984 and the lowest settlement since November 16, 2017.
Brent crude futures the global benchmark slumped 6.4% to $US65.57 a barrel, well and truly ending in bear territory and joining WTI which slumped into that zone last week.
The slide came as OPEC lowered its forecast for 2019 oil demand growth. The oil cartel now expects oil demand to grow by 1.29 million barrels a day next year, which is 70,000 b/d lower than last month’s forecast.
The selling on Tuesday followed a smaller slide on Monday which started after President Donald Trump posted a tweet that was meant to put pressure on the OPEC members not to cut supply to prop up prices, as Saudi Arabia had reportedly been considering.
News that Russia didn’t agree with the Saudi move added to the downward pressure.
