Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Oil stocks are suffering from the heavy weight of the current coronavirus outbreak and are crashing continuously. For now, there seems to be no hope.
The coronavirus is still raging with its usual effects on not just human lives but also oil stocks. Many businesses all over the world, especially those with activity in China, have been affected. Now, the deadly virus is racing past the human factor and taking oil down with it.
Coronavirus Shoots Down Oil Stocks
Oil stocks began the year with a more promising outlook. Most of Wall Street had interesting things to say about oil stocks because of the trade problems between the U.S. and Iran. As the tensions began and slowly worsened, panic set in and investors began to buy oil stocks. As the tensions gradually ended, the new coronavirus outbreak worsened. Now, all of the uncertainty in the world as the epidemic worsens, are successfully shooting down oil stocks. Both Exxon Mobil and BP have tanked as well.
As if the crash is not enough, the outlook has also worsened. Citigroup crashed its Brent Crude outlook to $54 from $69 where it was.
Can Oil Stocks Fight Coronavirus?
At the moment, it would be almost impossible to be optimistic about oil stocks. Citigroup said in addition to the forecast crash, there is still the possibility that things could fall as low as $47.
Figures from China also put a fine print on how bad the situation is. The new coronavirus began in China’s Wuhan city and has spread to other parts of the country. Many businesses are being forced to consider remote work as the only option. Businesses that need foot traffic are already suffering from people’s general reluctance to move around. Because of the relative stagnancy in China, the country’s oil consumption has dropped by at least 20%.
So far, more than 400 people have been cured of the coronavirus. For oil stocks to see some respite with the way things are going, two things would have to happen. Firstly, the speed with which people are being cured would have to increase. Secondly, the spread would have to be contained. If none of these happens, oil stocks might be in for a worse time in the near future.
CNBC’s Jim Cramer has a more bearish outlook on oil. Speaking on Monday, Cramer said:
“I am not here, though, to take political stands. My job is to help you try to make money. And the honest truth is I don’t think I can help you make money in the oil and gas stocks anymore.”
Tesla Stock Tells a Different Story
As oil continues to crash, other stocks seem to be on a rebound. The Dow Jones, the S&P 500 and Nasdaq all climbed 0.5%, 0.7% and 1.3% respectively. These helped correct a heavy selloff that happened last week.
As it continues its surge, TSLA has jumped another 15% and is currently at $885, heading to $900. Analysts are now suggesting that at the current spike rates, Tesla could hit $15,000 in 2024.