The energy sector is poised for a moderately lower start, pressured by low conviction weakness in the underlying commodities and in the broader equity futures. Equity sentiment steadied this morning following the recent run up in the benchmark indices as the markets assessed some disappointing retail results and looked ahead to the release of the Federal Reserve meeting minutes.
Following two-consecutive days of sharp gains, WTI and Brent crude oil futures are reeling in early trading as investors weigh the impact of possible production cuts by OPEC+ against comments from the IEA saying they expect oil market to see a slight supply surplus next year. Lingering concerns over an increase in tension in the Middle East also continued to mitigate after the chief of Hamas told Reuters today that it was near a truce agreement with Israel.
Additional weakness in the greenback helped stem the declines with the Dollar Index currently down at lows not seen since August. The head of the IEA’s oil markets and industry division said they expect global oil market will see a slight surplus of supply in 2024 even if the OPEC+ nations extend their cuts into next year. He added however that we are currently in a market deficit and all stocks are drawing at a fast rate.
More near term, investors will be looking to the next round of inventory data which analysts expect to show crude and gasoline stockpiles rose last week. Natural gas futures are on pace for their fourth-consecutive day of declines, pressured by reports showing record production and warmer forecasts for the first half of December.
Source: https://www.nasdaq.com