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Energy stocks turned lower on Tuesday after oil prices slid from multi-year highs amid market concern that the OPEC+ deadlock could result in a major rift that could break up the alliance.
Earlier on Tuesday, U.S. oil prices hit a six-year high while Brent rose to the highest level since October 2018, after OPEC+ called off on Monday the meeting of the ministers set to try, for a third time, to reach a consensus about oil supply management in the coming months.
After a long weekend for the July 4 holiday, the Dow Jones and the S&P 500 opened lower on Tuesday, having hit all-time highs on Friday on a positive U.S. jobs report. The NASDAQ Composite index opened higher today, driven by tech stocks.
Energy stocks, which rallied earlier this week in lockstep with oil prices, retreated in the afternoon European trade, and Shell and BP trading down 2 percent each in London. The U.S.-listed shares of Shell fell 0.5 percent at opening in New York, while BP slid 2.5 percent an hour after trade opened. ExxonMobil was also down by 2 percent, Chevron traded 1.5 percent lower, Occidental Petroleum plunged by 4 percent, and Marathon Oil Corporation was down by 3.1 percent at 10:30 a.m. EDT.
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European indices were also down on Tuesday afternoon local time, although the FTSE in London was higher earlier in the day and generally outperformed the other European markets in the afternoon, as oil stocks – which opened higher on Tuesday – had supported the FTSE index in early trade.
“The FTSE is outperforming its European peers as heavyweight oil majors lend their support,” Sophie Griffiths, an analyst at Oanda, told MarketWatch.
Investors continue to keep an eye on the equity markets and on how the recent rally in oil prices could translate into inflation, which, in turn, could prompt monetary policy changes from the Fed and other central banks.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.