US stock markets ended the trading session mostly red territory after oil prices failed to recover from a sharp drop during the session. The second largest US index S & P 500 closed with minor losses of 0.06% to 2435.61 points after energy stocks reported a decline of 1.6%. The Dow Jones also recorded a decline of 55 points to 21410.03 points, the most important role for the loss was Caterpillar.
Although the major US indices closed in the red yesterday, Dow Jones managed to reach a record high during the session. This year, US stocks perform well, as S&P 500 has recorded an increase in value by around 9%, mainly driven by information technology. The tech sector also rose by almost 20% this year, having increased the number of purchased shares of tech giants, which in turn led to an increase of 15% in the technological Nasdaq.
Analysts warn that if oil prices crossed the psychological barrier of $40 in its downward movement, hopes to stabilize inflation will end.
Oil prices fell about 3% to 10-month low in volatile session on Wednesday after fears along global glut of oil led to massive sales, despite evidence of a large drop in US oil reserves than expected. Futures light crude reached a low of 42.13 dollars a barrel, the lowest level since August 2016 and ended the trading session at 42.53 dollars a barrel, down from 2.25%.
Having gained in late February month, US oil has lost more than 20% of its value. Brent oil futures again recorded a decline of 1.20 dollars to 44.82 dollars a barrel. Anthony Hedrick, an analyst at CHS Hedging LLC, said the market wants to see evidence that restrictions by OPEC lead to balancing the market, but this is not happening. Yesterday we received information that stocks of light crude fell by 2.7 million barrels last week, surpassing expectations for a 2.1 million barrel.
Futures on US light crude oil for August delivery fell 98 cents (2.3%) to 42.53 dollars a barrel on the Mercantile Exchange in New York. This is the lowest level since August 10, 2016.
The August contracts of Brent crude fell by 1.2 dollars (2.6%) to 44.82 dollars per barrel in London.
Analysts say the most serious obstacle to the market remained steady rising yields in the US, which offset the arrangement OPEC to cut production. This puts pressure on the availability and willingness of the countries of the cartel to continue to support the agreement.
European markets also closed in the red on Wednesday as European Stoxx 600 index reported a decline of 0.18 percent in value. It seems that European stocks continued the negative series, which started last trading session, as were leading insurance stocks and shares of financial services companies.
One of the main reasons for the red color of shares yesterday’s London-based Provident, whose shares sank 17% after announcing that operating constraints of the reorganization of the company will affect the annual profits. Greater decline recorded and English FTSE100 index, which ended the session at 7447.79 points, which is a negative change in value by 24.92 points or 0.33%. The German index also recorded a small decline, offsetting to some extent the losses incurred earlier in the trading session. It ended the session at 12758.65 points.
