Energy stocks absorb 17% single-day plunge, hitting lowest level since 2004

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Chadian workers guide a pipe down a well in the Doba oil fields in southern Chad. AP/Susan Linnee

  • The S&P 500 Energy Sector fell 17% Monday to its lowest level in 14 years.
  • An oil price war over the weekend sent the commodity tumbling and sparked an energy-sector sell-off amid broader market panic about the coronavirus outbreak.
  • Exxon Mobil fell to its lowest in 11 years on Monday, while shares of Saudi Aramco fell below their December IPO price for the first time ever on Sunday.
  • Read more on Business Insider.

Energy stocks were hit hard Monday as an oil price war escalated and markets continued to sell-off amid concern over the coronavirus outbreak.

The S&P 500 Energy Sector fell 17% Monday, hitting the lowest level since September 2004, after a market-wide tailspin set off by continued panic over the coronavirus outbreak and an oil price war started by OPEC and Russia.

A sharp decline in oil prices sparked selling in the energy sector. Over the weekend, OPEC and its allies failed to reach an agreement over how much to restrict production amid the coronavirus outbreak, which had already had a negative impact on the commodity. Saudi Arabia then cut prices by the most in at least 20 years, starting a price war and sending oil prices down as much as 31%.

Exxon Mobil Corp. fell more than 14% on Monday, the most in 11 years and to its lowest market value since 1999. Chevron stock also fell 16% on Monday. On Sunday, shares of Saudi Aramco fell below their IPO price for the first time since they started trading in December.

There could be further pain ahead as oil prices continue to fall. Goldman Sachs said on Monday that the price war could push Brent crude to lows near $US20 per barrel – more than 40% lower than it had already fallen.

“The oil market is now faced with two highly uncertain bearish shocks with the clear outcome of a sharp price sell-off,” Damien Courvalin of Goldman Sachs said in a Monday note.

Such price levels will start creating “acute financial stress and declining production” from shale and other high-cost producers, and could exacerbate the decline in oil demand, Courvalin wrote.

US stocks pared losses early Monday, falling more than 7% before triggering a trading halt that lasted 15 minutes. When stocks resumed trading, they continued to fall. By noon EST, the S&P 500 was down around 5.7%.