Crude prices extend losing streak as WTI futures hit yearly low.
U.S. stocks traded mostly lower on Tuesday, as oil prices extended their slide to a record-setting 12th consecutive session.
The large-cap S&P 500 Index (NYSEARCA:SPY) fell 0.2% to 2,722.04. The Dow Jones Industrial Average (NYSEARCA:QQQ) fell 100.15 points, or 0.2%, to 25,287.03. Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) closed flat at 7,200.88.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) declined nearly 1% to 20.28 on a scale of 1-100 where 20 represents the historic average. Volatility spiked during the previous session as stocks extended their selloff.
Crude oil sunk further into bear market territory after U.S. President Donald Trump criticized Saudi Arabia’s plan to lower output levels. Saudi Arabia on Monday announced it would scale back production by 500,000 barrels per day in an attempt to shore up prices, which have plunged more than 23% since early October.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” Trump tweeted on Monday.
U.S. West Texas Intermediate (WTI) futures touched a session low of $56.85 a barrel on the New York Mercantile Exchange, the lowest this year. The U.S. futures benchmark settled at $57.17, down $2.76, or 4.6% from the previous close. Brent crude, the international futures benchmark, declined $3.04, or 4.3%, to $67.08 a barrel.
The Bottom Line: Oil markets are spiraling out of control as producers grapple for market share in the wake of U.S. sanctions against Iran. OPEC’s share of the market is expected to dwindle over the next six years as U.S. producers account for the vast majority of oil and natural gas growth, according to the International Energy Agency.