Oil had its worst week since the financial crisis as panic over the coronavirus pandemic battered global markets.
U.S. Federal Reserve Chairman Jerome Powell to assure investors that the central bank is prepared to cut interest rates to mitigate the virus’ threat to economic activity.
“We may be too far deep for any OPEC cuts to have a meaningful impact,” said Peter McGinn, market strategist at RJ O’Brien & Associates LLC. “If the virus keeps spreading, that is just going to keep hurting demand and cause another wave of panic selling. A production cut could give it a bounce, but these lows will persist for the foreseeable future without a vaccine.”
The stocks of U.S. explorers are on average worth just a quarter of their peak in mid 2014, when oil started plunging from more than $100 a barrel. The S&P Oil & Gas Exploration and Production Index has plunged 82% since.This week’s sell-off exacerbated challenges facing distressed energy borrowers, which have been pressured by high debt loads, low commodity prices, disappointing earnings, and investors reluctant to keep financing them.
Once at the vanguard of the U.S. shale revolution, Chesapeake Energy Corp. has fallen headlong toward collapse as it and rival drillers flooded the U.S. with excess natural gas, crushing prices and destroying billions of dollars in value.
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