OPEC bid to kill off US shale sends oil price down to 2009 low

NEW YORK : Oil industry stocks tumbled on Monday, leading US stocks lower, as crude prices sank to their lowest close since February 2009 in the wake after decision of Organisation of the Petroleum Exporting Countries (OPEC) not to cut output dimmed the odds of any quick recovery in oil prices.

Dow members ExxonMobil – world’s largest publicly traded international oil and gas company – and Chevron lost 2.6 percent and 2.7 percent respectively, while shale producer Continental Resources plunged 9.3 percent.

The Dow Jones Industrial Average closed down 117.12 points (0.66 percent) to 17,730.51. The broad-based S&P 500 dropped 14.62 (0.70 percent) to 2,077.07, while the tech-rich Nasdaq Composite Index fell 40.46 (0.79 percent) to 5,101.81.

Signs of disarray in the OPEC oil cartel prompted fears of a global glut of oil, wiping $2 off the price of a barrel of crude and leading to speculation that energy costs could continue tumbling over the coming weeks.

Shares in energy companies lost ground as the impact of the drop in oil prices rippled through European stock markets. Prices of other commodities also weakened following disappointment among traders that OPEC had decided late last week to keep flooding the global market with cheap oil.

The big pullback in petroleum-linked stocks came after OPEC’s decision not to cut output dimmed the odds of any quick recovery in oil prices.

Among the bigger losers, oil-services company Weatherford International shed 6.0 percent, while Devon Energy dived 10.1 percent after announcing $2.5 billion in deals to buy US oil assets from smaller companies.

Agencies.

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