Big losses in oil, energy sectors after Monday’s market meltdown triggered by coronavirus concerns

Monday’s market meltdown hit the oil and energy sectors particularly hard.

The Dow finished down more than 2,000 points, NASDAQ off 624 and the S&P 500 fell more than 200. Exxon Mobil, Hess Energy and Marathon Oil all dropped 20 percent.

People at the pump weren’t complaining about the extra cash in their pockets, but those who know the oil and gas industry say expect a rough ride ahead.

“I love it because you can get a full tank for like a couple of dollars,” said customer Shekira Smith.

But analysts were mortified at what was happening on Wall Street.

“Look at Pioneer Natural Resources, they are based here in the Dallas-Ft. Worth area. They lost half of their value today. So it's an ugly, ugly picture,” said Bernard Weinstein, SMU Cox School of Business professor. “It is not a happy day for the oil and gas industry in the United States.”

Weinstein said there were two major factors contributing to dropping oil prices. One -- OPEC and Russia can't agree on controlling output in an already over supplied market. Two -- coronavirus crippling production and therefore demand across the globe.

“So in the face of an increase in supply, coupled with the drop in demand, what's happened to prices? They dropped another $10. West Texas Intermediate is trading at about $34 a barrel right now, that's a 10 year low,” Weinstein said.

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Weinstein said the hardest hit are upstream companies, those that produce oil and gas, as opposed to those in transportation or refining.

“We will see more companies either consolidate, sell assets, some that are highly leveraged, yeah, they will go out of business. That's happened in the past and it's going to happen again if oil prices stay in this range,” Weinstein said.

Weinstein said it’s unclear how low oil prices will go, but there appears to be at least some light at the end of the barrel.

“The worst seems to be over in China. China appears to have contained the virus. Chinese factories are starting to ramp up again. People are starting to go back to work,” he said.

Weinstein said the downward slide of gas will continue, dropping possibly as low $1.50 a gallon.

He says overall, when it eventually happens, markets will be slow to rebound and it will take a long time for the global economy to heal.