Oil Nears Point That Could Trigger a Wall Street Sell-Off
- Oil market sell-off has some parallels with 2018 market crash
- Volatility jumps to 4-month high, but put skew remains subdued
Photographer: Jamie Schwaberow/Bloomberg
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As computer screens flash red for energy markets from Houston to Singapore, oil traders are urgently asking themselves one question: is a historic crash about to repeat itself?
The meltdown caused by the Chinese coronavirus outbreak is increasingly reminiscent of a plunge that happened just over a year ago. In October 2018, a sell-off across commodity markets left Wall Street banks racing to cover insurance policies, such as options contracts, that they had written to oil producers, sparking a new wave of selling that ultimately caused prices to tumble by more than 40% over two months to $49.93 a barrel.