Oil prices skidded to their lowest level in nearly seven years on Monday, knocking down shares of major oil companies on Wall Street as a global glut showed no signs of abating.
Brent crude prices fell to $40.60, the lowest since February 2009, after a meeting of members of the Organization of the Petroleum Exporting Countries Friday ended in disagreement over production cuts and without a reference to its output ceiling.
Exxon Mobil (XOM), down 2.6%, and Chevron (CVX), which fell 2.7%, were the biggest drags on the Dow Jones Industrial Average and benchmark S&P 500 indexes. Increased strength in the dollar for a second straight session also made it more expensive to hold crude positions.
Brent crude was last down $2.26, or 5.3%, at $40.74 a barrel, while U.S. crude settled down $2.32 or 5.8% at $37.65 per barrel.
“As a result of the collapse in oil and gas prices today, the market is worried that you’re going to see less capital spending, you’re losing a lot of a good-wage jobs in the oil patch, and people are worrying that we’re going to see a snowball of defaults among high-yield energy issuers,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.