Oil continued with its slide along with assets after Saudi Arabia announced it would hike its output capacity and the World Health Organization declared the Covid-19 a pandemic.
It has been a tumultuous week for the Kingdom and the United Arab Emirates, pounded by jitters of economic collapse and weak austerity policies, as Gulf Arab nations, now face the biggest challenge to their economy: plummeting oil prices.
Oil futures settled lower Wednesday, impacted by U.S. government data that crude local supplies increased for a seventh week in a row, and by Saudi Arabia's push to boost production capacity as it escalates a price showdown with Russia that sent prices of crude reeling this week to four-year lows.
Futures in New York declined 4 percent. The fight for market share worsened as Saudi Aramco revealed new measures to raise its capacity for oil production to 13 million barrels a day and next month Abu Dhabi National Oil Co. vowed to produce as much as possible.
The World Health Organization declaration pushed the Dow Jones Industrial Average falling into a bear market, ending the longest bull run in American stock history.
The single-day 25 percent plunge prices of oil late Monday sent global finance markets falling amid widespread disruptions caused by the pandemic. In the Gulf, over $400 billion was sold off in the markets on the first two days of trading before recovering some of those losses by the middle of the week.
Stock in Saudi's mostly government-controlled oil company, Saudi Aramco dropped dramatically before bouncing back nearly 10 percent Tuesday only to fall again Wednesday, sending its stocks to below December's initial public offering price.
West Texas Intermediate crude on the New York Mercantile Exchange retreated $1.38, or 5 percent to end at $32.98 per barrel. The global benchmark, May Brent crude shed $1.43, or 3.7 percent to $35.79 per barrel on the ICE Futures Europe.
The dissolution of the alliance between OPEC and its partner refiners jolted an already fragile market grappling with the pandemic that is wreaking havoc on world economies. The health emergency has forced global policymakers to signal stimulus efforts to avert an economic blow from the virus.
In the midst of the collapse in oil prices and the pandemic shattering global demand, the Energy Information Administration slashed its demand forecast for petroleum and fuel by 900,000 barrels for the first quarter. The Department of Energy also announced U.S. oil production will average 12.7 million barrels per day next year, marking the first year-over-year drop since 2016.
