Brent oil prices slump to 1999 lows, stocks clamber higher

Stormy oil markets sent Brent prices crashing to their lowest since 1999 on Wednesday, though a stabilisation of some petrocurrencies and a bounce in European stocks gave investors something buoyant to cling to.

The wildest trading in oil market history continued with benchmark Brent down another 10% to $17 a barrel, having plunged 24% the day before after U.S. crude prices had gone deeply negative, Reuters reports.

With coronavirus lockdowns slashing demand for everything from petrol to jet fuel, and markets still bloated by a turf war being fought by Saudi Arabia and Russia, places to store the excess supply are running out.

Christopher Peel, CIO of Tavistock Wealth, said eight oil supertankers were now moored on the river outside his window in the Portuguese capital, Lisbon

“There is nowhere to put the oil so it shouldn’t come as any surprise to anyone that the front months (oil price contracts) are getting decimated,” he said, though he said it should be a temporary situation.

There was encouragement, meanwhile, that Europe’s main stock markets had opened higher after a poor close overnight in New York and a mixed day for Asia.

Focus was on whether European Union leaders, who meet on Thursday, will be able to agree more aid to help the region’s economies cope with the coronavirus outbreak.The pan-European STOXX 600 index was up just over 1%, after tumbling more than 3% on Tuesday following the collapse in oil prices.

Italian shares gained 1.3% and the government’s bond yield fell after Prime Minister Giuseppe Conte said Italy, one of the countries hit hardest by the pandemic, could start pulling out of strict stay-at-home orders from May 4.

Traders were also buoyed after Italy breezed through a major debt sale on Tuesday and speculation continued that the European Central Bank would provide more support measures.

“It’s no surprise that we see (bond yields slipping) today,” said DZ Bank strategist Sebastian Fellechner, citing the conclusion of Italy’s jumbo bond sale.

“Brent is stable this morning ... this is also reflected then in the government bond market, in that we see spreads are stabilising and (core) yields are slightly higher this morning.”