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Energy (XLE) was Wednesday’s top performing S&P sector, +0.8%, despite a third straight daily decline in U.S. crude oil futures, as the market digested a hotter than expected U.S. producer price index reading, which was seen reinforcing expectations for aggressive Federal Reserve interest rate increases.
Front-month Nymex crude (CL1:COM) for November delivery closed -2.3% to $87.27/bbl, and December Brent crude (CO1:COM) ended -1.9% to $92.45/bbl, both at their lowest levels in a week.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (USOI), (NRGU)
Meanwhile, utilities (NYSEARCA:XLU) slumped to the bottom of the sector standings, -3.3%, with Entergy (ETR), Alliant (LNT) and Duke Energy (DUK) among the biggest losers, as rates on short-term Treasury bills surged as data showed U.S. inflation still raging.
OPEC cut its forecast for growth in crude demand in 2022 and 2023, offering a justification for the group’s larger than expected production cut it said was part of ongoing efforts to balance oil markets.
In its monthly report, OPEC sees global oil demand rising by 2.64M bbl/day this year, down from 3.1M bbl/day in its September report, and growth in oil demand in 2023 of 2.34M bbl/day, below last month’s estimate of 2.7M bbl/day.
The revised estimates come after OPEC+ agreed to cut production by 2M bbl/day starting in November, a move that sparked strong gains in crude oil futures last week.
