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While you were sleeping: Oil hits lowest this year

While you were sleeping: Oil hits lowest this year

By Margreet Dietz

June 21 (BusinessDesk) – Wall Street declined from record highs as oil prices slid to the lowest level in seven months amid unabated concern about the global glut.

In 3.38pm trading in New York, the Dow Jones Industrial Average fell 0.2 percent, while the Nasdaq Composite Index retreated 0.7 percent. In 3.22pm trading, the Standard & Poor’s 500 Index dropped 0.5 percent.

The Dow fell as slides in shares of General Electric and those of Nike, recently down 2.1 percent and 1.4 percent respectively, outweighed gains in shares of Merck and those of Pfizer, recently up 1.5 percent and 1.2 percent respectively.

Shares of Chevron and those of Exxon Mobil also fell, down 1 percent and 0.6 percent recently, as oil prices declined, touching the lowest level this year.

“People are getting a little fatigued waiting for the production cuts to have effect,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, told Bloomberg. Traders are “very nervous about the near-term prospects.”

OPEC and non-OPEC oil producers' compliance with a deal to cut global output has reached its highest in May since they agreed on the curbs last year, reaching 106 percent last month, Reuters reported, citing a source familiar with the matter.

OPEC compliance with the output curbs in May was 108 percent, while non-OPEC compliance was 100 percent, the source said. Another source confirmed compliance by all producers in May was 106 percent, according to Reuters.

"Given the expectation that you'll see higher production levels in several areas of the world, it's going to offset all they're taking off the market," Gene McGillian, manager of market research at Tradition Energy, told Reuters.

Shares of Chipotle Mexican Grill sank, down 7.1 percent as of 3.38pm in New York, amid concern about the burrito chain’s margins.

Chipotle warned marketing and promotion costs would rise in the second quarter, from the first quarter, and that, "as a result, we expect other operating costs as a percentage of sales for the second quarter to be at or slightly higher than reported for the first quarter."

“We remain Neutral on shares of Chipotle as we believe the sales and unit economic recovery ought to be further along 18 months after the initial food safety incidents," Peter Saleh, an analyst at BTIG, wrote in a research note Monday, CNBC reported.

In Europe, the Stoxx 600 Index ended the session with a 0.7 percent decline from the previous close. France’s CAC40 Index shed 0.3 percent, while Germany’s DAX Index decreased 0.6 percent, and the UK’s FTSE 100 Index fell 0.7 percent.

The British pound declined as Bank of England Governor Mark Carney said he remained concerned about the impact of Brexit on the nation’s economy.

“From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment” to higher interest rates,” Carney said in prepared remarks for a speech in London.

“In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations,” according to Carney.

(BusinessDesk)

ends

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