Canadian oil production could hit…
The solar energy sector is…
Oil prices were down sharply on Monday after the latest manufacturing data showed that the sector contracted for the 5th straight month in April, ending a 30-month period of expansion. Brent crude was down 1.8% to $79.15 per barrel at 11:30 ET, marking the first time it has slipped below $80 per barrel in nearly four weeks.
Meanwhile, WTI crude lost 2.1% to trade at $75.20 per barrel after the manufacturing report showed that April Manufacturing Purchasing Managers Index (PMI) clocked in at 47.1 percent, 0.8 percentage points higher than the previous month’s reading but the 6th month it came in below 50%. A PMI above 50 represents an expansion when compared with the previous month while a reading under 50 represents a contraction.
Oil prices have also come under pressure from an impending interest rate hike in the current week. The Fed is expected to increase interest rates by another 25 basis points when it meets on May 2-3. Further, the U.S. dollar has been rising against a basket of currencies over the past week, making oil more expensive for other currency holders.
Over the past few weeks, oil prices have lost forward momentum after the 2 April announcement of voluntary output cuts failed to counter worries about demand linked to a weakening economic backdrop and a hawkish Federal Reserve. Growing fears of a recession due to rising interest rates as well as the risk that Chinese demand could fall short of expectations in the coming months remain a serious overhang on oil prices.
There are also fears that Russian output might not have fallen despite government announcements.
Not surprisingly, energy stocks have also started losing their luster: Energy SPDR (XLE) lost $739 million last week at a time when investors added $46.1B to the fund market and the broad market SPDR S&P 500 ETF (NYSEARCA:SPY) managed to pull in $4.9B. XLE has lost 3% over the past 30 days but is nearly flat in the year-to-date.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com:
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.