Shares in the largest oil companies in Europe dropped to their lowest level in eight months on Tuesday, dragged down by across-the-board equity sell-offs in global markets and tumbling oil prices due to fears of oversupply and slowing economic growth.
Shares in Shell, Total, Eni, and Equinor were all down in the early afternoon in Europe on Tuesday, while Aker BP led the losses in the oil sector with more than a 9-percent decline.
Apart from the sector and global sell-offs, Shell was also dragged down by a report by Bloomberg, saying that the supermajor is in talks to buy Midland, Texas-based Endeavor Energy Resources for some US$8 billion, nearly half what Endeavor Energy Resources was hoping to get earlier this year. Exxon, Chevron, and ConocoPhillips have also considered bidding for Endeavor, but they have decided not to, people familiar with the matter told Bloomberg.
The STOXX Europe 600 Oil & Gas index was down 1.5 percent in the early afternoon to its lowest level since early April this year.
Oil prices also plunged on Tuesday, on the back of the global equity sell-offs and continued concerns that the OPEC/non-OPEC cuts may not be enough to rebalance an oversupplied market, especially if fears of slowing global economic growth materialize.
At 08:25 a.m. EDT on Tuesday, WTI Crude was down below the $50 handle, having dropped 2.27 percent to $49.06, while Brent Crude prices were trading below the $60 threshold, dropping 2.01 percent to $58.41.
The stock sell-off comes at the start of the two-day Fed meeting which is widely expected to result in another interest rate hike on Wednesday.
“The missing ‘Santa Rally’ is becoming more and more an unexpected ‘Santa Crash’ with epicentre in the United States,” JCI Capital fund manager Alessandro Balsotti told Reuters, commenting on the global market sell-off.
By Tsvetana Paraskova for Oilprice.com
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