Oil price slides again to $55 a barrel amid virus fears

European shares inched higher, recovering from their worst week in nearly seven months, but jitters remained over the economic fallout from a virus outbreak in China.

Oil price slides again to $55 a barrel amid virus fears

European shares inched higher, recovering from their worst week in nearly seven months, but jitters remained over the economic fallout from a virus outbreak in China.

The pan-European Stoxx 600 index and the Ftse 100 rose slightly but the price of Brent crude slumped again -- dropping by $1.70 to below $55 a barrel.

That reflects major fears that the deadly coronavirus could yet cause significant global economic havoc.

Oil and gas stocks were among the worst performers for the day as worries over demand in China continued to erode oil prices.

“There are signs of some success in battling the virus, as the number of recoveries increases, providing another positive narrative for markets looking to capitalise on the first decent sell-off in weeks,” said Chris Beauchamp, chief market analyst at online broker IG.

However, investors are likely to stick to cautious plays in the near-term, with the death toll for the Chinese coronavirus still rising and multiple countries setting travel bans on China.

Further souring the mood, Chinese stock markets crashed upon opening after a long holiday.

“Markets are more or less in this wait and see mode where they await new news regarding the coronavirus,” said Teeuwe Mevissen, senior market economist at Rabobank in Amsterdam.

European travel and leisure stocks, which have been among the worst hit by uncertainty over China, rebounded, helped by the Ryanair’s earnings boost.

Sterling fell sharply after British prime minister Boris Johnson set out tough terms for EU talks, rekindling fears Britain would reach the end of the 11-month transition period without agreeing a trade deal.

The sides have until the end of the year, when a standstill transitional period expires, to secure a deal on trade and future relations but Mr Johnson is striking a tough tone, saying Britain will not adhere to the EU’s rules and regulations.

The EU on the other hand has warned Britain that access to its single market of 450 million people will depend on how far London agrees to adhere to such rules on environmental and labour regulations.

“Sterling appears to be coming off on the not very encouraging signs from the two sides at the start of the negotiations. They are positioning themselves at two extremes,” said Adam Cole, chief currency strategist at RBC Capital Markets in London.

Additional reporting Reuters

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