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Equities tumble and bring Crude Oil demand down along with it!
Oil prices slumped on New York and London markets Aug. 4 upon concerns about the global economy, fueled by a combination of the European Central Bank’s resuming bond purchases and diving US stock values.
European leaders face a widening debt crisis that started in Greece and spread to Italy and Spain. Analysts report rising concerns about European banks heavily invested in the debt of countries having financial problems.
James Zhang, an analyst with Standard New York Securities Inc., the Standard Bank Group, said the market “took a dim view of the ECB’s assessment of market conditions and fled to safety.”
The Dow Jones Industrial Average posted its worst drop since December 2008, falling 512.76 points.
Consequently, energy commodities came under immense pressure, noted Barclays Capital analysts.
“The precipitous fall in prices [Aug. 4] was trigged by a combination of technical stop-losses and broad-based risk aversion rather than any direct changes in underlying oil market fundamentals,” said Barclays analyst Amrita Sen.
