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Oil prices slip to lowest since June, Dow drops 632 points

Oil prices fell Tuesday amid the COVID-19 pandemic and the end of the summer driving season. File Photo by Bill Greenblatt/UPI
Oil prices fell Tuesday amid the COVID-19 pandemic and the end of the summer driving season. File Photo by Bill Greenblatt/UPI | License Photo

Sept. 8 (UPI) -- U.S. Markets fell on Tuesday as oil to their lowest level since June amid a decline in demand due to the COVID-19 pandemic.

West Texas Intermediate crude, the U.S. benchmark, dropped $3.01 a barrel, or 7.6%, to trade at $36.76 a barrel, having traded as low as $36.13 earlier in the day marking the lowest level since June 16. Brent crude, the global benchmark, slipped more than 5.3%, to trade at $39.78, which is also its lowest level since June.

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In the broader market, the Dow Jones Industrial Average fell 632.42 points, or 2.25%, while the S&P 500 dropped 2.78% and the Nasdaq Composite ended the day down 4.11%

Tech stocks also dragged markets down on Tuesday, as Microsoft fell 5.41%, Zoom Video dropped 5.14%, Amazon declined 4.39%, Facebook lost 4.09%, Alphabet slid 3.64% and Netflix closed down 1.75%.

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Tesla stock plummeted 21.06% for its largest single-day drop after it was not added to the S&P 500 after trading on Friday.

Bank of America said in a recent note to clients it will take three years for demand to recover from COVID-19 pandemic presuming there's a vaccine or cure by that time.

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U.S.-China trade tensions rising along with production coming back online also affected semiconductor stocks as Nvidia fell 5.62%, Micron dropped 3.12%

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WTI prices plunged into a record negative low in April but have made gains since then, including a 90% rise in May. Prices moved higher after the record low as international producers scaled back production to counteract the decline in demand.

But recently prices have trended lower again. The WTI crude decline Tuesday followed Saudi Aramco lowering its official selling prices for October, sparking concerns about demand, said Helima Croft, RBC Capital Market's managing director and global head of commodity strategy.

"Today's oil price move is a clear sign that the market now seriously worries about the future of oil demand," said Rystad Energy's senior oil markets analyst Paulo Rodriguez-Masiu. "The streak of losses is driven by a stalling crude demand outlook for the rest of the year, with rising cases of COVID-19 and the end of the summer driving season in the U.S., as well as Asian refineries putting on [the] breaks."

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Still, Daniel Flynn, a market analyst at The Price Futures group, said he thinks the market "already has priced in lower demand and has recovered from the market going negative a few months back."

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So if "states continue to reopen, we should see businesses and demand increase to levels that were expected before this nightmare," Flynn added in a daily report.

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