Energy Follows Broader Market Slump; Crude Oil Drops 10%
Fears that the recession is not recovering, and in fact deepening, caused crude oil futures to plummet 10 percent on Monday.
Crude oil for April delivery fell $4.39 to close at $40.37 a barrel at the end of floor trading on the New York Mercantile Exchange. Brent crude also lost more than $4 on the London ICE exchange.
The decline was the largest price drop for crude oil in 7 weeks.
A report released today showed that construction project spending dropped to a four year low in January.
Algerian Energy Minister Chakib Khelil said it was quite possible that OPEC would cut production again at the cartel’s scheduled March 15 meeting in order to stem the fall in oil prices.
Shares of Halliburton Co. dropped $1.53, or 9.38%, to close at $14.78 a share.
Schlumberger Ltd., the world’s largest oilfield services provider, fell $2.22, or 5.83%, to $35.84 per share.
The Baker Hughes’ U.S. rig count fell by 57 rigs last week to 1,243 rigs. This level is 39 percent below what it was 24 weeks ago when it stood at 2,031.
The Dow Jones Industrial Average dropped below 7,000 for the first time since 1997, and is down 22.9 percent on the year. The index lost 299 points on the day, a fall of 4.24 percent.
American International Group Inc. (AIG) posted a staggering $61.7 billion in quarterly losses. The government agreed to inject more money into the company by granting another $30 billion in loans, on top of the $150 billion the government has already invested.