Oil skids on oversupply fears, US stock futures jump

Swati Pandey, Reuters

Posted at Apr 06 2020 08:14 AM

A general view of Equinor's Johan Sverdrup oilfield platforms in the North Sea, Norway December 3, 2019. Ints Kalnins, Reuters/file

SYDNEY -- Oil prices skidded on Monday after Saudi-Russian output discussions showed no immediate signs of progress while US stock futures jumped as investors were encouraged by a slowdown in coronavirus-related deaths and new cases.

Sterling fell after British Prime Minister was admitted to hospital following persistent coronavirus symptoms as the pandemic rapidly spreads.

Brent crude fell as much as $3 in early Asian trading after Saudi Arabia and Russia postponed a meeting over a potential pact to cut production to Thursday.

Analysts said the news could lead to some sell-off in currency markets too.

Also weighing on the pound were fears other senior government officials who were in the same briefing as Prime Minister Boris Johnson could be affected by the virus, said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, Canada.

The pound fell 0.4 percent in early trade on Monday in a knee-jerk reaction and was last down 0.3 percent at $1.2222.

The US dollar was up a touch against the yen at 108.58.

Equity investors were looking at the positives though.

US stock futures jumped more than 1.5 percent in early Asian trading on Monday after US President Donald Trump expressed hope the country was seeing a "leveling off" of the coronavirus crisis.

The gains came despite New York Governor Andrew Cuomo cautioning that it was not yet clear whether the crisis in the state had reached a plateau.

Australian and Nikkei futures also pointed to gains.

Investors took solace from the fact that COVID-19 cases also appeared to be reaching a peak in Europe with Italy seeing the number of patients in intensive care falling for the second consecutive day.

"Focus in markets will now turn to the path out of lockdown and to what extent containment measures can be lifted without risking a second wave of infections," National Australia Bank analyst Tapas Strickland wrote in a note.

"Key to a strong rebound in China will be the ongoing lifting of containment measures with Wuhan – the epicenter of the outbreak – set to lift containment measures on April 8."

Strickland, however, noted many in China were still subject to social distancing and isolation restrictions to prevent a resurgence in infections.

The pandemic has claimed more than 64,000 deaths as it further exploded in the United States and the death toll climbed in Spain and Italy, according to a Reuters tally.

Concerns about heavy damage to the global economy have pushed investors into the perceived safety of government bonds.

Brent crude futures slipped 6.2 percent, or $2.13, to $31.98 a barrel while US crude dived 7.4 percent, or $2.12, to $26.12.

Spot gold was down 0.2 percent at $1,612.9 an ounce.