Energy stocks were down as much as 8.7% in premarket trading Thursday after a report showed crude oil prices fell to a record low, sending shares tumbling.
The Dow Jones industrial average was down 0.6% at 19,922.10, while the S&P 500 was down 1.2%.
Oil, a commodity that is critical to the economy, has been on a tear since the start of the year and is currently trading at a 17-year low.
U.S. crude prices were trading at around $35 per barrel for the first time since May and the Brent crude oil futures contract hit a new record high of $50.42 a barrel Thursday, the highest price in two years.
The index’s slide came after U.K. Prime Minister Boris Johnson said that Britain’s energy needs will rise in the next five years and that its dependence on Russian oil and gas could be “in the balance” by 2030.
Johnson told the U.N. General Assembly that he was “not happy” with the world’s economic situation and that he wants to find solutions to the problems it faces.
Oil futures contracts in London closed at $40.90 a barrel, the lowest price in five years.
“I think the market is being held up by a number of factors, which is a lot of the credit goes to the government, a lot is due to the Chinese,” said Alex Caddick, a senior energy analyst at New York-based RBC Capital Markets.
“We’re going to see a lot more price increases as the years go on, but the fundamentals of the oil markets are still holding up pretty well.”
A Reuters poll of U.A.E. stock analysts found that the outlook for the energy sector is “fairly rosy” and that oil and natural gas will be the main drivers of the global economy in the future.
“There are more upside opportunities in the sector than downside, and we are still a long way from a global glut,” said Eric Kohn, an analyst at Capital Economics in London.
“This sector is still relatively small and not well understood in the U, but it is very attractive to many investors and the sector will continue to grow.”
Oil prices have been falling for a while now, with prices dropping to levels that would make it unlikely to be a bubble at this point,” said Matt Taylor, a spokesman for the Commodity Futures Trading Commission, the agency charged with regulating the energy markets.
The oil industry has had a rough couple of months, with energy prices dropping by nearly a quarter in the first quarter of 2018, the year the global economic slowdown began.
Brent crude fell more than 10% to $43.10 a barrel in the week ending June 24, with U.C.L.A.’s benchmark benchmark U.H.
A falling 1.7%.
The price of crude oil, a measure of global oil prices, has dropped in recent weeks.
“The U.R.E.’s latest energy-linked rebound will be driven by energy exports to Asia, particularly China and India, which are both emerging economies that need more oil to sustain their rapid growth. “
It will be very difficult to maintain that level of price in a short period of time without significant increases in the prices of energy-related commodities, and this is where the outlook is somewhat bleak,” he said.
“The U.R.E.’s latest energy-linked rebound will be driven by energy exports to Asia, particularly China and India, which are both emerging economies that need more oil to sustain their rapid growth.
As the U of A’s market share grows, this trend is likely to accelerate.”
Oil prices, which have been on an upward trajectory since mid-2014, have fallen to a 17 year low.
The U. S. Energy Information Administration (EIA) said in a report this week that global oil inventories fell to their lowest level in five decades on Thursday, as refiners and pipeline companies reported lower inventories.