Global oil markets turned red quickly after Black Friday. WTI futures in New York and Brent in London plummeted more than 12% from their pre-Thanksgiving closes during the crash.
They both recovered somewhat by the close, but for Brent Crude Futures, it was still the seventh-worst one-day drop in history. Brent crude settled near $73 a barrel.
In the south of Africa, a number of countries have banned flights from their countries.
At a time when markets expect the Fed to increase the pace of tapering, this comes at the right time. Tightening expectations may be revisited.
In a market run for cover, G-10 government bond yields fell everywhere and across all of the curves. As risk aversion took hold, safe-haven assets were sought out.
In the beginning, stocks dropped due to fears of lockdowns and travel bans, but other factors, such as anemic volumes following the holidays, exacerbated the selloff.
From European diesel trades and time-spreads to the price of oil today compared to oil tomorrow, to opaque options markets, the panic spread everywhere.
Post-Thanksgiving holiday conditions with lower liquidity and a breakdown of technical support levels have contributed to the price drop.
Earlier in the week, the market had already been unusually volatile. In an effort to curb soaring energy costs, the U.S. and other top oil consumers released supplies from emergency reserves on Tuesday.
The OPEC+ cartel, led by Saudi Arabia, had responded by saying it may abandon plans to increase production. London’s benchmark Brent price surged back above $80 a barrel.
Crude oil prices plunged as U.S. futures broke through key technical levels — the 100-day and 200-day moving averages.
On a day when many market participants were absent, algorithmic computer-driven trades achieved the upper hand.
Those who are expecting a quick recovery of prices and volume after the U.S. market returns after the holiday consider this a buying opportunity. Long-term prospects are favorable.