Oil plunges to seven-year low, Wall St. down

Mon Dec 7, 2015 4:39pm EST
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By Sam Forgione

NEW YORK (Reuters) - 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 LCOc1 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 (XOM.N: Quote), down 2.6 percent, and Chevron (CVX.N: Quote), which fell 2.7 percent, were the biggest drags on the U.S. Dow 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 LCOc1 was last down $2.26, or 5.3 percent, at $40.74 a barrel, while U.S. crude CLc1 settled down $2.32 or 5.8 percent 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.

MSCI's all-country world equity index .MIWD00000PUS, which tracks shares in 45 nations, fell 0.5 percent.

The Dow Jones industrial average .DJI fell 0.7 percent to 17,730.51. The S&P 500 .SPX lost 0.7 percent to 2,077.07. The Nasdaq Composite .IXIC was off 0.8 percent, at 5,101.81.

The dollar rose on expectations the U.S. Federal Reserve is on track to raise interest rates next week in the wake of November's solid jobs report. The dollar index .DXY, which tracks the greenback against a basket of six major currencies, rose 0.39 percent, to 98.74.   Continued...

A screen displays the Dow Jones Industrial Average, following the closing bell on the floor of the New York Stock Exchange December 4, 2015. REUTERS/Brendan McDermid