More economic misery on the horizon for USBusiness | 8 Apr 2020 11:00 am
Oil prices have been even more volatile than the stock market in recent weeks as demand has dried up for energy amid a global economy weakened by the coronavirus outbreak. Russia and Saudi Arabia have also been locked in a price war, refusing to cut production sharply even as the world is awash in excess oil.
President Donald Trump said last week that he hoped and expected the two sides could agree on production cutbacks, which helped prices spurt higher temporarily.
But investors still aren’t convinced about a deal, and benchmark U.S. crude oil fell US$2.45, or 9.4 percent, to settle at US$23.63 per barrel. Brent crude, the international standard, fell US$1.18 to US$31.87 per barrel.
Its decline is another reminder of how many people are no longer driving to work, flying to meetings or heading to the store amid the economic shutdown. And the hangover could last for a while.
“It’s very hard today to envision baseball stadiums in June filled with people drinking beer and watching games,” said Patrick Schaffer, global investment specialist at J.P. Morgan Private Bank.
“People today don’t anticipate that the economy is going to turn back on like a light switch, but rather that it will be a gradual reopening of certain parts of the economy.”
Experts say more deaths are on the way due to the deadly virus which has already claimed at least 81,000 lives around the world. The U.S. leads the world in confirmed cases with more than 386,000, according to a tally by Johns Hopkins University.
More economic misery is also on the horizon. Economists expect a report on Thursday to show that 5 million Americans applied for unemployment benefits last week as layoffs sweep the country. That would bring the total to nearly 15 million over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.-AP