Brent crude added 21 cents to $40.94 per barrel in London after plunging $2.27 on Monday to close at $40.73.
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Following a 6 hour meeting Friday, OPEC announced that it is leaving its output ceiling unchanged at 30-M BPD. Dow futures were down 0.4 percent to 17,679.00 and S&P 500 futures dropped 0.5 percent to 2,071.50.
“As a result of the collapse in oil and gas prices today, the market is anxious that you’re going to see less capital spending, you’re losing a lot of a good-wage jobs in the oil patch, and people are worrying that we’re going to see a snowball of defaults among high-yield energy issuers”, said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St Louis. Both grades hit their lowest settlement prices since February 18, 2009.
“Compared with other major oil producers, Saudi Arabia is in a strong position to weather low oil prices, and so it can afford to take a long-term view of the oil market”, Tuvey said.
The sell-off extended to the refined fuels market, with USA heating oil HOc1 tumbling to a May 2009 bottom on forecasts for milder-than-usual weather that could reduce heating demand in the near-term.
Falling oil prices helped airline stocks.
Oil prices went below the $40-mark for the second time within a month on the previous trading day on Monday, following a decision of the Organisation of Petroleum Exporting Countries (Opec) late last week to keep producing optimally in an already saturated market. JetBlue Airways jumped $1.01 a share, or nearly 4 percent, to $26.49. Among the fallers were Britain’s BP, which was down 1.5 percent, and France’s Total, which dropped 1.8 percent. West Texas Intermediate, the USA benchmark, will trade for $48 in the period, according to forecasters, compared with $37.88 Tuesday on the New York Mercantile Exchange.
Several OPEC sources told the news wire that the group’s members decided that dropping reference to the output ceiling, rather than raising its production target, would have less of a negative impact on crude prices.
In Hong Kong, the Hang Seng Index fell 1.6%, while Chinese Shanghai Composite sank 1.3%.
U.S. shale oil output was expected to fall for a ninth consecutive month in January, the U.S. Energy Information Administration said on Monday. Korea’s Kospi slipped 0.4%, while the Australian S&P/ASX 200 slumped 0.5%.
CHINA TRADE: Customs data showed imports and exports shrank again in November, though there are signs that domestic demand in some sectors is strengthening.
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Exxon Mobil Corp. and Chevron Corp., the biggest USA energy producers, fell 2.9 percent and 2.6 percent, respectively. The euro was up 0.3 percent at $1.0875 while the dollar fell 0.3 percent to 122.98 yen.
