Oil prices fall on output worries

Daisy's picture

Oil prices retreated yesterday after their longest rally in more than five years while the dollar rose and Treasury yields were near recent peaks ahead of the release of minutes from the US Federal Reserve’s last meeting.
Falling oil prices put pressure on the energy sector, which was the biggest drag on Wall Street’s S&P 500 as it moved between positive and negative territory.
US Treasury yields were near multi-week or multi-month peaks as traders expected the Fed’s June meeting minutes - due Wednesday afternoon - would reinforce a hawkish shift in global central bank policy. Trading was likely affected by lighter participation the day after the US July 4 Independence Day holiday and ahead of the Fed minutes and the US jobs report due on Friday, said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“There’s not a whole lot driving the market, which is why we’ve seen it go both directions,” he said.
At 11:53am ET, the Dow Jones Industrial Average was down 13.03 points, or 0.06 percent, to 21,466.24, the S&P 500 had gained 1.03 points, or 0.04 percent, to 2,430.04 and the Nasdaq Composite had added 25.86 points, or 0.42 percent, to 6,135.92.
Some stock investors were holding back ahead of the Fed minutes, which could provide insight on the central bank’s plans for interest rate hikes or possible US balance sheet reduction.
Benchmark 10-year Treasury yields hit a more than seven-week high of 2.357 percent and three-year yields hit a roughly 3-1/2-month high of 1.598 percent in morning US trading.
“The central banks all seem to be in agreement in kind of a hawkish signaling,” said John Herrmann, director of interest rates strategy at MUFG Securities in New York.
Analysts said yields remained near their recent highs due to the possibility that Friday’s US non-farm payrolls report would show a jump in jobs growth in June, which would also push yields higher. (Source)