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Hansen: Why the tanking oil price is hitting global stocks

Last week saw a big rally in the price of crude. But this week has seen sellers return to the market, says Saxo's Ole Hansen. So how low can it go? Hansen says USD 29.30 a barrel is the technical level to watch for in Brent.

Ole notes that there has been a massive transfer of wealth from oil producers to global consumers, through low fuel and heating costs. While this is good for the consumer, it's not for energy companies or countries that rely on a higher price.

This is having a knock-on effect across markets with a strong correlation arising between the falling price of crude and global stocks. He says there are three reasons for this: raised fears of a major credit event within the energy space, deflationary concerns and the risk of wealth funds needing to finance rising deficits.

02:23 minutes
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