Pessimism about an oil deal send crude oil and US equity futures lower this morning, pressuring Australian stocks.
At 1pm EST the ASX 200 was 16 points or 0.3% weaker at 5492 with the energy sector the biggest drag at -1.9%. US crude oil futures sank 38 cents or 0.83% this morning to US$45.70 a barrel after Saudi Arabia appeared to back away from a production cap. Dow futures followed crude lower, lately down 52 points or 0.27%.
Crude oil rallied for much of last week in anticipation that the OPEC cartel might announce limits on production at Wednesday's meeting. However, crude sagged around 4% on Friday amid scepticism over whether members of OPEC would abide by any deal.
“The market is currently quite pressured by the uncertainties raised from various reports, including Saudi Arabia pulling out of Monday’s talks with non-OPEC nations,” Seo Sang-young, market strategist at Kiwoom Securities in South Korea, told Bloomberg. “It’s also highly suspicious whether OPEC will keep its promises even if it achieves an accord because the members are constantly raising production.”
Other pockets of weakness this morning included materials -1%, metals & mining -1% and financials -0.4%. The gold sector rallied 1.1%, telecoms 0.8% and utilities 0.4%.
China's Shanghai Composite advanced 0.62% and Japan's Nikkei fell by the same percentage.
Gold futures jumped $15 or 1.27% to US$1,196 an ounce. The dollar was buying 74.42 US cents.
Big moves in crude and gold this morning, suggesting a possible turning point in recent market trends. A flaccid ASX reflecting weak US futures. Did anyone really expect anything from OPEC these days? The latest crude rally struck me as pretty phony. Trading: best I can say is that I've done better than this time last week, when I was getting smashed by ALK (as opposed to alcohol - that came later). Tentative first dabs at TND and NOX. Missed the buy opp in BSR, dammit.
