FILE PHOTO: Investors look at screens showing stock information at a brokerage house in Shanghai

By Marc Jones

LONDON (Reuters) – Stormy oil markets sent Brent prices crashing to their lowest since 1999 on Wednesday, though a stabilisation of some petrocurrencies and a bounce in European stocks gave investors something buoyant to cling to.

The wildest trading in oil market history continued with benchmark Brent down another 10% to $17 a barrel, having plunged 24% the day before after U.S. crude prices had gone deeply negative.

With coronavirus lockdowns slashing demand for everything from petrol to jet fuel, and markets still bloated by a turf war being fought by Saudi Arabia and Russia, places to store the excess supply are running out.

Christopher Peel, CIO of Tavistock Wealth, said eight oil supertankers were now moored on the river outside his window in the Portuguese capital, Lisbon.

“There is nowhere to put the oil so it shouldn’t come as any surprise to anyone that the front months (oil price contracts) are getting decimated,” he said, though he said it should be a temporary situation.

There was encouragement, meanwhile, that Europe’s main stock markets had opened higher after a poor close overnight in New York and a mixed day for Asia.

Focus was on whether European Union leaders, who meet on Thursday, will be able to agree more aid to help the region’s economies cope with the coronavirus outbreak.

The pan-European STOXX 600 index <.STOXX> was up just over 1%, after tumbling more than 3% on Tuesday following the collapse in oil prices.

Italian shares <.FTMIB> gained 1.3% and the government’s bond yield fell after Prime Minister Giuseppe Conte said Italy, one of the countries hit hardest by the pandemic, could start pulling out of strict stay-at-home orders from May 4.

Traders were also buoyed after Italy breezed through a major debt sale on Tuesday and speculation continued that the European Central Bank would provide more support measures.

“It’s no surprise that we see (bond yields slipping) today,” said DZ Bank strategist Sebastian Fellechner, citing the conclusion of Italy’s jumbo bond sale.

“Brent is stable this morning … this is also reflected then in the government bond market, in that we see spreads are stabilising and (core) yields are slightly higher this morning.”

Germany’s 10-year yield was up 2 basis points to -0.46%.

The five-year U.S. Treasuries yield also rose to 0.33% after hitting a record low of 0.3010% on Tuesday. The 10-year notes yield stood at 0.561%, near the lowest since March 9, when panic buying drove it to a record low.


While a Reuters tally shows there have been more than 2.5 million cases globally of the COVID-19 respiratory disease caused by the new coronavirus, another $500 billion in relief has come through for the U.S. economy, and the governors of half a dozen U.S. states are planning to reopen business.

Restrictions are tentatively being lifted in a host of other countries and many more are unveiling stimulus measures. South Africa’s president pledged a $26 billion rescue package on Tuesday for his country’s economy, which was suffering from anaemic growth even before the coronavirus outbreak.

Mexico unveiled a $31-billion package and cut its benchmark rate by 50 basis points. South Korea readied a third supplementary budget and a $32.4 billion fund to prop up its economy.  

“If the global economy can reopen in eight weeks or so the damage is done (for equity markets), but the longer-term damage is in the bond markets,” said Tavistock’s Peel.

U.S. stock futures had bounced back to be about 1% higher after Tuesday’s falls.

In the currency market, the dollar had levelled out after rising when investors fled oil-linked currencies such as the Norwegian crown, Russian rouble and Canadian dollar.

The safe-haven yen held firm at 107.79 to the dollar while the Swiss franc stood near five-year high against the euro at 1.05255 franc. Norway’s crown and the rouble both recovered though, and the Australian dollar was up 0.8% after a record surge in retail sales last month spurred by panic buying.

(Editing by Timothy Heritage)