FTSE drops 1% by 54 points to 5,426 this morning as doubts grow over oil price deal between Saudi Arabia and Russia
- FTSE 100 index of Britain’s biggest firms falls 1% or 54 points to 5,426 today
- Doubts grew over an oil price deal that Donald Trump says he has brokered
- Coronavirus pandemic continues to raise risk of prolonged global downturn
- Crude loses $1.18 or 4.7% to $24.14 a barrel after record 24.7% rise yesterday
Share prices in London dropped this morning as doubts grew over an oil price deal between Saudi Arabia and Russia that Donald Trump said he had brokered.
The FTSE 100 index of Britain’s biggest companies fell 1 per cent or 54 points to 5,426 shortly after opening as oil prices shed some of their huge gains.
With the coronavirus pandemic raising the risk of a prolonged global downturn, investors are now seeking safety in the US dollar and government bonds.
It comes as global coronavirus cases surpassed one million with more than 52,000 deaths as the pandemic further exploded in the US and the death toll climbed in Britain, Spain and Italy.
Oil prices dropped, with US West Texas Intermediate (WTI) crude losing $1.18, or 4.7 per cent, to $24.14 a barrel, having surged a record 24.7 per cent yesterday.
YESTERDAY: The FTSE 100 finished up yesterday after a relatively steady day on the market
THIS WEEK: The FTSE rose on Monday and Tuesday, fell on Wednesday and rose yesterday
LAST WEEK: The FTSE 100 index finished at 5,510 last Friday, rising 6 per cent overall last week
Stronger oil prices yesterday had seen gains in the US on Wall Street markets as the Dow Jones Industrial Average went up 2.2 per cent or 470 points to 21,413.
Mr Trump said yesterday he had spoken to Saudi Crown Prince Mohammed bin Salman, and expects Riyadh and Moscow to cut oil output by as much as 10 million to 15 million barrels, as the two countries signalled willingness to make a deal.
He tweeted last night: ‘Just spoke to my friend MBS (the crown prince) of Saudi Arabia, who spoke with President Putin of Russia and I expect and hope that they will be cutting back approximately 10 million barrels, and maybe substantially more which, if it happens, will be great for the oil and gas industry!’
Saudi Arabia said it would call an emergency meeting of the Organization of the Petroleum Exporting Countries.
A currency dealer works today in the trading room of KB Kookmin Bank in Seoul, South Korea. The benchmark Korea Composite Stock Price Index finished roughly flat at to close at 1,725
Doubts have grown over an oil price deal between Saudi Arabia and Russia that US President Donald Trump (pictured at the White House in Washington DC yesterday) said he had brokered
The amount cited by Mr Trump would represent an unprecedented cut equal to 10 per cent to 15 per cent of global supply, in output per day terms, a common unit of measurement.
However, Mr Trump provided few details, an omission some analysts said was likely intentional.
Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said: ‘He is a business man and smart enough to know these things. A cut of 10-15 million barrel per day (bpd) would be simply impossible.
‘How could Riyadh and Moscow agree on such a big cut, just about a month after they had fought over a cut of 1.5 million?’
The German share price index DAX is pictured at the stock exchange in Frankfurt yesterday
In early March, talks over production cuts between the two countries collapsed, leading them to start a price war that pushed oil prices to the lowest levels in nearly two decades.
Nor did Trump make any offer to reduce US production, which has become the world’s largest at the expense of Saudi and Russian output.
Royal Bank of Canada analysts said in a note: ‘Both Riyadh and Moscow will also be looking for participation from US producers, and this may prove now to be the biggest obstacle to an agreement.’
Any cut is unlikely to make up for near-term oil demand destruction, estimated to range between 20 million and 30 million bpd.