Markets Right Now: Energy stocks pull US market lower

On Wednesday, New York-traded oil futures plunged $1.32, or 2.94%, after data showed large weekly builds in US petroleum products. The American Petroleum Institute (API) at 4:30 p.m. (2030 GMT) on Tuesday will release its own weekly supply-demand report, seen as a precursor to the government data. Drillers, meanwhile, are returning to work as efficiency improves and resilience to crude oil prices in the upper $40 range takes hold.

Global upstream oil and gas investments are expected to plummet 24 per cent this year, with little signs of improvement for 2017, the International Energy Agency (IEA) said on Wednesday.

“Long suffering oil bulls will now turn nervously to the US EIA’s commercial crude inventory numbers”, OANDA senior market analyst Jeffrey Halley said.

This week’s inventory data comes at a time when oil markets are uncertain about the pace of supply and demand rebalancing.

On Friday, Baker Hughes will report the latest US rig count data for the week ended September 16th.

The report reduced its oil demand forecast for every quarter until 2018. The IEA estimated that since May, the USA had suspended 460,000 barrels a day of high-cost production. This allows them to boost output in an already oversupplied market.

The World Energy Investment Report explains a “reorientation of the energy system” with investments starting to divest from fossil fuels, which now still dominate energy supplies. This was so, according to the IEA, because “Middle East producers opened the taps”.

Based on the forecasts, “both Chinese and European oil demand growth have all but vanished by 3Q16”, said Parry.

“This huge drop is not good news for the stability of oil market”, Birol said. “That is the big question today”, the IEA said. But it sees upstream spending stable or declining “slightly” in 2017. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes.

“Recent pillars of demand growth – China and India – are wobbling”, the agency said, adding increases in European consumption had “vanished” and USA “momentum” toward higher consumption had slowed. Decline in oil prices also had a negative impact on the energy sector, which in turn dragged down major USA benchmarks (read: Crude Output Control Speculation Resurfaces: 4 ETFs to Watch).