Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Down 2% as Wall Street Tumbles on China Contagion Worry

CommoditiesSep 20, 2021 02:44PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Barani Krishnan

Investing.com - Global oil markets tumbled as much as 2% Monday as Wall Street cratered amid worries about a China debt crisis that triggered a flight to safety among investors.

Further weighing on crude were signs that U.S. oil production was also returning from a three-week clampdown on output forced by end-August Hurricane Ida.

New York-traded West Texas Intermediate, the benchmark for U.S. oil, settled down $1.68, or 2.3%, at $70.29 per barrel. 

London-traded Brent crude, the global benchmark for oil, finished the session down $1.42, or 1.9%, at $73.92.

Wall Street’s three main stock indexes — the Dow, S&P 500 and Nasdaq — all fell about 2% or more. Nasdaq, the tech sector bellwether, was on track to its worst loss in seven months. Even the yield on the U.S. 10-Year Treasury note —- which had rallied over the past week — plunged its most in nearly a week.

The Dollar Index was the only contrarian to the trend, rising to a four-week high.

Global markets plunged as a growing debt crisis at major Chinese property group Evergrande sparked concerns about spillover risks in the world’s second-largest economy.

“China has been doing lots of things over the past couple of months now to the extent they are messing with the economy there, and that could impact its demand for crude oil,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “They are the swing demand center, in the same way the Saudis are the swing producer. Everything turns on what China does. If we lose China, we’ll lose the oil rally.”

Adding to the bearish sentiment in oil were remarks over the weekend from China’s Premier Li, who said Beijing will use “market tools” to stabilise commodity prices. That appeared to be a coded message for the release of more oil and metals supplies from stockpiles versus pricey imports.

Since Friday, a dark mood had set in on risk markets after U.S. Treasury Secretary Janet Yellen reiterated her warning that America could fall into a new recession if Congress does not reach a deal soon to raise the country’s debt limit. In years past, raising the debt ceiling had been likened to a rubber stamp exercise. But in today’s politically divided United States, it has become a crisis in its own right.

To top the list of worries, the Federal Reserve’s FOMC, or Federal Open Market Committee, will begin on Tuesday a two-day meeting that will be keeping investors on tenterhooks.

For months, there has been speculation that the central bank will announce a taper of its $120 billion bond and assets buying program that had been in place since the Covid outbreak of March 2020. The Fed’s timeline for scaling back economic stimulus is important as it represents a first step towards an eventual hike in interest rates, which it has kept at near zero over the past 18 months. 

The most powerful officials within the FOMC, including the Fed chairman, have done all they can to delay a pullback of the stimulus on the excuse that the COVID resurgence via the Delta variant. 

This time too, the Fed may issue a wishy-washy statement on the taper, followed by more mixed messaging by Chairman Jay Powell on Wednesday. Pundits do not expect the Fed to make any announcement on the taper till November.

Yet, in a market already operating on excessive fear, it’s more likely for investors to err on the side of caution.

“Coming on a day where liquidity is lower … markets are nervous and the U.S. dollar (has) risen ahead of the FOMC, there is an outsized impact,” said Jeffrey Halley, who heads Asia Pacific research at online trading platform OANDA.

On Hurricane Ida-related outages, the Bureau of Safety and Environmental Enforcement reported that less than 19% of US Gulf oil production remained shut in versus last week’s levels of 25%.

Oil Down 2% as Wall Street Tumbles on China Contagion Worry
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Janice Childress
Janice Childress Sep 20, 2021 4:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
End of fiscal dip, bills come due for Joe investor too! Buy, Buy Buy!
Janice Childress
Janice Childress Sep 20, 2021 4:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sure not McConnell's Grim Reaper promise to not raise the debt ceiling also?
Wayne Cammack
Wayne Cammack Sep 20, 2021 3:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China uses 14 m/BPD and produces 3.9 m/BPD. They have to get it from somewhere.
Di Tol
Di Tol Sep 20, 2021 3:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
why dont they sack this parrot Yellen
Guy Gram
Guy Gram Sep 20, 2021 3:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China adding barrels from reserves does nothing to lower demand. Its a short term play. If we get a few inventory builds in the next month or two look for china to buy up in major dips in oil price.
Awais Khan
Awais Khan Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Triding work
Awais Khan
Awais Khan Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
and plz
Awais Khan
Awais Khan Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
fast ans plz
CJ McC
CJ McC Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Say what homie?!
Alexies Anthony
Alexies Anthony Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes
We Trade
We Trade Sep 20, 2021 2:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yeah sure man. let's tride
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email