German 10-year yields fell 4 basis points to 0.48 percent, back to levels seen before the European Central Bank meeting on December 3 when it cut rates and extended its bond-buying scheme.
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In parallel, futures on the Dow Jones Industrials Average were pointing to a more than 400-point drop at the start of trading, with the Footsie mimicking the move with 122 point drop to 5,796.36.
The agency now expects USA crude production to average 8.7 million bpd in 2016 and 8.5 million bpd in 2017. “People are uncertain, and when they’re uncertain they’re scared”. That gain was a reversal from a day earlier, when the market turned in its worst day since September.
US stocks rebounded strongly Thursday, as Wall Street cheered over positive earnings and a rebound in oil prices.
Brent crude fell to $29.30 a barrel at one point, before recovering slightly, while USA crude touched a low of $29.28 – its lowest price since November 2003.
WTI for February delivery fell as much as 64 cents to $30.56 a barrel on the New York Mercantile Exchange and was at $30.59 at 12:57 p.m. Hong Kong time.
Crude oil has dropped below $30 a barrel from a high of over $100 during the summer of 2014, eviscerating energy company profits.
Brent is heading for a weekly loss of almost 10 per cent and is down 22 per cent from its 2016 high, also on January 4. Chevron shed $3.25, or 3.8 percent, to $82.22.
Intel dropped 9.1 percent after the chipmaker posted its fourth-quarter results, noting its personal computer business continues to slump. The stock fell $2.90 to $29.84.
Traders said options expiry for the front-month contract in USA crude, scheduled at yesterday’s settlement, was also pushing players to cover positions. The stock, which had fallen sharply a day earlier, rose $4.68 to $18.29.
And the Federal Reserve reported that US industrial production, which includes manufacturing, mining and utilities, dropped in December for the third month in a row. And another government report indicated USA retail sales dipped last month.
Meanwhile China, a key global oil consumer, stays in the market spotlight amid signs of an economic slowdown.
Stocks plunged at the open and the sell-off continued all day. Since 2014, the world has enjoyed a windfall equivalent to 2 percent of gross domestic product it would otherwise have spent on crude, according to Michala Marcussen, global head of economics at the French bank. The German DAX was down 2.5 percent, while the FTSE 100 in London was off 2 percent.
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The preliminary number, 21 percent higher than December, is likely to add to worries over a global supply glut that pushed the oil prices to 12-year lows this week.
