WASHINGTON, May 25, 2017 – Loads of news hit the transom between Wednesday afternoon and Thursday morning’s opening bell. The result? Stocks in general are up nicely today as of 12:30 p.m. ET. But crude oil prices and most publicly traded companies in the oil patch are getting hit.
The U.S. Federal Reserve failed to signal an interest rate increase in their Wednesday afternoon missive, although there’s no reason to believe at this point that they won’t hike rates during their next monthly meeting in June. For this reason, the Fed news yesterday barely caused a ripple in market action.
The market mover today is news that OPEC and Russia have essentially agreed to keep their current lower production targets for crude oil at current levels for the next 9 months. You’d think that would be good news for stocks in the oil patch. But if you did, you’d have been wrong.
Apparently, Wall Street and other world markets were expecting that the cartel’s + Russian production cuts would last forever. The very fact they might not, however, hammered the price of both Brent and West Texas Intermediate crude oil, both of which took roughly a 4 percent swan dive off the high board in Thursday morning’s opening trade.
Both measures bravely attempted to rally mid-day, but as of just before 1 p.m. ET, that move has faltered. WTI is currently bid at $49.35 bbl., a slightly better than $2 drop (4.01 percent) from Wednesday’s closing price. Brent, as is usually the case, is doing a fair bit better. It’s currently perched at $51.91 bbl., down $2 bbl for a 3.76 percent drop. Both measures are still gyrating wildly as we write this, however, so it’s anybody’s guess where this trade will close later today.
As a result of Thursday’s bizarre action in crude, most stocks in the oil patch are off modestly to sharply. It remains to be seen how long and how long today’s negativity will go. But things might not improve here until next week, given the upcoming Memorial Day holiday that will be observed by U.S. stock exchanges.
It’s odd, though. Memorial Day is the traditional kickoff to the American summer vacation season. It’s a time when oil and gasoline prices usually head for the stratosphere, given the mass migration of American families to their automobiles, SUVs, vans, RVs and the like as they light out for the territories. Perhaps this perception will steady things for the oil folks next week.
Tech stocks are mostly recovering from Wednesday’s decline, with the tech-centric NASDAQ doing the best among the major averages, currently up47.03 points to stand at 6,210, a 0.76 percent gain. The broader-based S&P 500 average – the one most frequently followed by professional traders and investors – stands now at 2416.59, up 12.16 on the day for a half-a-percent gain, while the DJIA lags the other two measures. The Dow is currently up 77 points (a 0.37 percent gain) to stand at 21,089.43.
Trading action at the moment appears to be moderate. We’d expect things to taper off as Wall Street types, Federal government employees and many others try to get a jump on this weekend’s annual summer holiday launch. If you live on the East Coast and expect to make it to the beaches before the middle of next week, you’d best be in your car immediately after reading this article!
We may (or may not) be back Friday with a short column, depending on market action. If there’s little in the way of news, it will be hard to read anything significant into those end-of-week numbers, although there could be a flurry of action Friday and Tuesday as traders snug up positions (or dump them) to close out the month.Click here for reuse options!
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