What the heck happened to oil prices? But more significantly, what does it mean for the broader stock market and the global economy?
That’s what has some Wall Street investors scratching their noggins, as crude futures and U.S. stocks staged a tandem tumble this week, just when investors thought the worst was over following a bruising October for risk assets.
Now, oil futures are unraveling, down at least 20% after putting in a 52-week high early last month. And it isn’t so much the descent into bear-market territory—as the recent slump for crude can be characterized—as it is the celerity of the selloff that has market participants unsettled.
About five weeks: That’s all it took for bulls to pivot from cavalierly pondering if $100-a-barrel oil was a genuine possibility before the end of 2018 on the back of Iranian oil export sanctions imposed by the U.S. on Nov. 4, to wondering how ugly the current implosion in black gold could get before finding a bottom.
On Friday, West Texas Intermediate crude for December delivery CLZ8, -1.32% lost 48 cents, or 0.8%, to settle at $60.19 a barrel on the New York Mercantile Exchange, for the lowest front-month contract settlement since March 8, according to FactSet data. Prices lost 4.7% for the week, tallying their fifth straight weekly drop. The 10th session decline in a row matched the longest skid since 1984.
But beyond that, the most important question is this: What does oil’s decline really mean?
That’s the query that Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., posed to MarketWatch via email last week as the decline in oil was gaining steam.
“Very large monthly down moves in crude oil has often heralded something more ominous,” he wrote on Nov. 1. “Most market observers think there is