Oil Price Dives To 21-year Low, Disney Stops Paying Workers

The price of US oil has fallen to a low not seen since 1999 amid soaring global supply and a huge downturn in demand.

At one stage overnight the May futures contract for WTI, the US benchmark, was trading as low as $14.47 a barrel, having slumped over 18% in the last 24 hours. Brent crude was also lower, off 3% at $27.18, although it remains well above its recent low of $21.

On Friday, oilfield services giant Schlumberger (SLB) said there could be worse to come for the industry. After announcing a first quarter loss of $7.4bn, moving to slash its dividend by 75% and signalling a round of job cuts, CEO Olivier Le Peuch said that the firm is prepping for a severe downturn. He said the second quarter will be more severe for the company than the first. Schlumberger cut its workforce in North America by 1,500 people in Q1 and said there will be more “structural change” to come in Q2. “Despite the recent agreements by the world’s largest oil producer to cut production, Q2 is likely to be the most uncertain and disruptive quarter that the industry has ever seen,” Le Peuch said.

Meanwhile, markets in Asia dipped Monday as the virus continues to spread across the globe. The Nikkei was off 1.2% while Hong Kong’s Hang Seng dipped 0.2%. Investors may be cautious ahead of a big week for economic data and corporate earnings.

Companies are still adjusting to the virus, and over the weekend Walt Disney Co (DIS) announced that it will stop paying more than 100,000 employees this week — close to half of its workforce. The suspension of pay will save the firm as much as $500m a month, with its theme parks and hotels shut in the US and Europe. Disney is likely to end up under significant scrutiny for the move, which leaves its workers relying on unemployment benefits at the same time as the firm prepares to make a billion dollar plus dividend payment.

Late last week, it was also reported that Southwest Airlines (LUV) has contacted union leaders to initiate talks about concessions such as pay cuts once the $50bn in federal funding allotted to bailout the airline industry is exhausted.

Tech heavy Nasdaq outperforms over week

Last week the tech heavy Nasdaq Composite outperformed the S&P 500 and Dow Jones Industrial Average by a substantial margin, which investment firm T. Rowe Price put down to gains from chipmakers, Microsoft (MSFT) and Apple (AAPL) in a Friday note. The index made substantial gains following reports of slowing Covid-19 infection rates in hard hit areas, and on data that showed promising signs for a treatment currently being trialed at a Chicago hospital.

1 2 3 4
View single page >> |

Disclaimer: eToro (UK) Ltd is authorized and regulated by the Financial Conduct Authority. eToro (Europe) Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission. eToro AUS ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.