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Shares of energy companies fell sharply Monday, closing -2% at the bottom of the S&P sector standings after exploding more than 13% higher last week, as oil and natural gas futures gave back some of their recent gains.
Front-month Nymex crude (CL1:COM) for November delivery settled -1.6% to $91.13/bbl, snapping a five-session winning streak, and December Brent crude (CO1:COM) ended -1.7% to $96.19/bbl, as data from China raise worries about demand from the world’s largest crude importer.
Front-month Nymex natural gas (NG1:COM) for November delivery finished -4.6% to $6.435/MMBtu, falling to its lowest level in nearly three months, as rising production was seen tipping the market out of balance.
ETFs: (NYSEARCA:XLE), (XOP), (VDE), (OIH), (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (USOI), (NRGU)
Analysts tied crude oil’s weakness to the September reading of the Caixin service purchasing managers index in China released over the weekend, which fell to 49.3 from a 55 reading in August – the first contraction in four months – weighed by COVID-19 lockdowns.
Fears the Federal Reserve will continue its aggressive policy of raising rates to stem inflation caused equity markets to decline and the dollar to strengthen, hurting oil and other dollar-based commodities enough to prompt some analysts to say crude is entering “a corrective phase” after last week’s rally.
OPEC+’s 2M bbl/day production cut last week signals the cartel has a new $90-$100 price floor for crude oil that might cause consternation for U.S. lawmakers but should prove lucrative for oil producers.
