US stock futures rise with earnings in view, as investors grapple with economic growth and Delta variant concerns

Stock Market Traders
  • US stock futures gained Tuesday, as investors looked for the robust 2Q earnings season to roll on.
  • Investors weighed concerns the spread of the Delta coronavirus variant and its potential impact on economic growth.
  • Criticism of Tencent in China dragged the stock down and raised fears of further regulatory pressure.
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US stock futures gained on Tuesday as investors weighed healthy second-quarter earnings reports against concerns about the spread of the COVID Delta variant and its impact on economic growth.

Markets pointed to a return to strength at the open, with S&P 500 futures up 0.37%, Dow Jones futures 0.49% higher, and Nasdaq futures rising 0.14%, at last check at 6:39 am E.T.

Investors appeared to be boosted by a string of robust corporate earnings and the positive progress made by the Biden administration’s infrastructure bill. A fresh slate of quarterly financial updates lies ahead Tuesday, with Eli Lilly, Fiat Chrysler, BMW and Marriott on the docket.

Concerns about the fast spread of the Delta variant in the US and China were rising, as investors assessed the potential for a slowdown in global economic growth associated with higher COVID-19 cases and more lockdowns.

“With a number of US states reinstating mask mandates and tightening restrictions, the optimism of a few weeks ago is now being replaced by doubts as to how resilient the recovery we’ve seen so far this year can remain, as we head into the autumn and the weather starts to get colder,” Michael Hewson, chief market analyst at CMC Markets, commented.

Key Asian equity markets closed lower Tuesday as an increase in COVID cases led to renewed or extended restrictions in the region. Tokyo’s Nikkei 225 lost 0.5%, and the Shanghai Composite declined 0.47%.

Fears about renewed regulatory pressure in China hit markets on Tuesday after a Chinese state-run media outlet described online gaming was “spiritual opium” and “electronic drugs” on Tuesday, prompting fears that Beijing may go after online entertainment providers in another crackdown. The stock price of entertainment heavyweight Tencent fell as much as 10%.

“After the last few weeks, even oblique warnings from authorities are ignored at your peril, and it seems that regulatory risk is alive and well in China still,” Jeffrey Halley, senior market analyst at OANDA, said.

European markets started the session higher, building on Monday’s gains built on upbeat manufacturing and other economic data. Frankfurt’s DAX was up 0.14%, London’s FTSE 100 gained 0.34% and the Euro Stoxx 50 inched 0.16% higher.

The yield on the US 10-year Treasury note rose to 1.199%, up 2.7 basis points. Bonds rallied and yield dropped in the previous session after US manufacturing data came in weaker than expected. Investors are watching for signs of a pullback in economic growth that might shift the Federal Reserve’s view of when and whether to taper its asset purchases.

Oil prices edged higher, recovering from losses prompted by demand concerns linked to COVID-19 restrictions. Brent crude was up 0.48% at $73.24 per barrel, while WTI crude gained 0.46% at $71.59 per barrel.

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Stock market sell-off batters energy stocks as Delta variant and falling oil prices worry investors

oil derrick
  • Energy stocks tumbled as the broader market sold off on Monday, with the S&P 500 Energy Index falling 4.5%.
  • Fears surrounding the Delta variant were top of traders’ minds, as the virus could threaten further lockdowns.
  • Some observers still see oil rising over the long term as supply struggles to meet demand.
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Energy stocks tumbled as the broader market sold off on Monday, with the S&P 500 Energy Index falling 4.5%.

No company in the index was spared, with the best-performing stock, Texas-based oil equipment maker NOV Inc, losing about 3%. The worst-performing, Diamondback Energy, fell more than 7.5%. The oil majors were likewise pummeled but avoided the worst of the damage: Chevron and ExxonMobil were among the top performers in the energy index.

The extremes were driven by ratings changes: NOV was buoyed by a rating upgrade from BMO Capital, while Diamondback saw Morgan Stanley revise its price target for the stock downward.

Energy stocks were hit most notably by declining oil prices, which were at a seven-week low at the start of the trading day. But fears surrounding the Delta variant were top of traders’ minds, as the virus could threaten further lockdowns.

“Because the numbers in places like the UK are getting so large, there now is a realistic concern that this could create lockdowns,” said Jeff Currie, commodities head at Goldman Sachs, on CNBC.

In Currie’s view, a spike in cases driven by the Delta variant might not be enough to derail rising oil prices. Even with OPEC+ agreeing to up oil output, supply continues to undershoot demand; Goldman estimates a deficit of 2.3 million barrels per day.

Mark Haefele, CIO at UBS Global Wealth Management, agreed with Currie, writing in a note on Monday that risk-tolerant investors should go long on oil and the associated stocks.

Goldman and UBS have set their oil price targets at $80 per barrel, while other analysts are eyeing even higher prices. Bank of America is calling for $100 per barrel in 2022.

The S&P 500 Energy Index was down 4.33% as of 2:15 p.m. ET.

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S&P 500 closes at record high as FOMC minutes show little changes to rate outlook

Jerome Powell reads document while speaking in front of the Senate.
  • The S&P 500 closed at a record high on Wednesday as minutes from the last FOMC meeting signaled minimal changes to the central bank’s narrative on inflation, interest rates, and asset purchases.
  • The minutes showed officials are continuing to make progress towards reaching the threshold to scale back asset purchases.
  • The yield on the US 10-year Treasury fell as low as 1.295%, the lowest point since late February.
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The S&P 500 closed at a record high on Wednesday amid falling Treasury yields as minutes from the Federal Reserve’s June meeting showed policymakers are continuing to make progress towards reaching their threshold to scaling back asset purchases.

The minutes showed that several participants are still uncertain about the outlook for growth and inflation, saying it’s “too early to draw firm conclusions about the paths of the labor market and inflation.” Fed officials also discussed tapering asset purchases but there was no consensus on the timeline.

Here’s where US indexes stood at the 4 p.m. ET close on Wednesday:

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“We didn’t expect much from today’s FOMC Minutes, and our expectations were met. The majority of the new information delivered by the Fed was already distributed to the markets via the Summary of Economic Projections and the ‘dots’,” said economists from Jefferies.

Jefferies expects more details on the future of policy to emerge from the Fed’s meeting at Jackson Hole later this summer.

The yield on the US 10-year Treasury fell as low as 1.295%, the lowest point since late February.

The S&P 500 has hit a record closing high in eight of the past nine trading days.

Amid massive US stimulus and record high stocks, BlackRock strategists have switched to a neutral stance on US stocks while upgrading their views on European and Japanese equities, which they see as growing beneficiaries from the further reopenings of economies shut down by the COVID-19 crisis. The BlackRock Investment Institute outlined, among other items, its six to 12-month tactical views on selected assets in a mid-year report released Wednesday.

Bitcoin traded just under $35,000 on Wednesday after briefly overtaking the level.

Oil prices recovered after falling on Tuesday, despite rising sharply earlier in the day after a meeting between the OPEC+ group of oil-producing countries was abruptly called off.

West Texas Intermediate crude fell as much as 3.1%, to $71.07 per barrel. Brent crude, oil’s international benchmark, dropped 2.6%, to $72.60 per barrel, at intraday lows.

Gold climbed as much as 0.7%, to $1,810 per ounce.

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Oil hits 3-year high after OPEC+ abandons their meeting, meaning supply could tighten even further

A woman holds a pump nozzle in her hand at a gas station and refuels a car.
  • Oil prices hit a three-year high after OPEC+ abandoned their meeting on Monday.
  • Prices jumped because the lack of a deal brings the market closer to an August without extra barrels from the alliance, an analyst said.
  • Oil prices have risen 50% since the start of the year as countries begin to recover from the COVID-19 crisis.
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Oil prices jumped to their highest in three years on Tuesday after OPEC and its allies abandoned talks on Monday without setting a new date for the next meeting.

Ministers had been set to resume talks on Monday after failing to reach a deal on raising oil production last week, with the United Arab Emirates rejecting a proposed eight-month extension to output curbs. Now that no deal to boost production has been reached, it could signal tighter supply and rising prices.

Brent crude futures rose 0.8% to $77.78 a barrel, trading around their highest since autumn 2018, while West Texas Intermediate rose 2.3% to $76.92 a barrel. This year alone, crude oil has soared by almost 50%.

The current “crisis” within OPEC, which has seen Saudi Arabia and the UAE fail to agree on whether to continue the production cuts agreement, is not entirely unexpected, according to analysts at Commerzbank.

Some OPEC members, including Saudi Arabia, had been hoping to increase production over the coming months. But the UAE refused to agree and sought better terms that would change how its quota is calculated and allow it to produce more, Deutsche Bank strategist Jim Reid said in a note.

Oil prices hit post-pandemic highs after reports that Monday’s meeting had been called off and that the group would continue with quotas at current levels.

Almost at the moment prices begin to rise, the differences between the members increase and production discipline declines, analysts at Commerzbank said.

The “meeting’s postponement brings the market closer to an August without extra barrels from the alliance, and that is why oil prices immediately jumped on the news,” Louise Dickson, oil markets analyst at Rystad Energy, said in a note.

“Postponing the meeting also reveals that the objections that the UAE raised are not easy to brush off,” she added. “It may take some convincing and some serious concessions from Saudi Arabia to reach a deal now, and these should only mean increasing output more than initially suggested going forward – if a deal is to be agreed among OPEC+.”

But one source familiar with the OPEC+ talks told the Financial Times that there is no postponement. “The UAE blocked the decision, so the meeting is cancelled. The current production levels continue as they are,” a person familiar with Saudi Arabia and Russia’s positions told the FT.

The dispute is still leaving the oil market cold, chiefly because supply is currently tight, Commerzbank said. But it will likely to put pressure on prices in the medium term, especially in view of the structural shift away from fossil fuels.

Read More: Famed investor Michael Burry is predicting the ‘mother of all crashes’. Here’s what 9 other key ‘Big Short’ players are doing now.

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Oil holds above $75 as investors weigh OPEC+ deadlock with fresh talks ahead

Oil pump sunset background

Oil futures held above $75 a barrel on Monday morning, as markets wait to see whether OPEC+ talks today can resolve the deadlock on an output deal driven by a clash between the United Arab Emirates and Saudi Arabia.

The OPEC+ group of major oil-producing countries failed last week to come to agreement on output quotas for 2021 and on extending the underlying internal supply deal by seven months, to December 2022. A fresh round of talks is due on Monday.

Brent crude futures were last up 0.24% at 4:45 am E.T., trading at $76.37 per barrel. WTI futures on Globex were up 0.23% at $75.32.

Saudi Arabia and Russia are pushing for a slow increase of 400,000 barrels a day each month for the rest of 2021, which most OPEC+ members back. The snag came with the extension to the deal that denotes how much oil each country contributes to overall supply from the group. The UAE refused to accept the extension without an adjustment to its contribution quota, which it sees as out of line with its output capacity and unfair compared with Saudi Arabia’s arrangement.

Should the deadlock in OPEC+ not be resolved, then the July ouput agreement could automatically run throughout August by default, said Kevin Solomon, energy economics analyst at StoneX.

“This would be troubling scenario for the global economy; the oil market would tighten at an even faster rate and prices could quickly exceed $80/bbl, which would hamper the global economic growth prospects through inflationary pressures,” Solomon said in a note.

Demand for oil is likely to rise as a result of the easing of pandemic restrictions, so the restrictions on supply could cause prices to skyrocket, he said. Ensuing price rises could in turn slow down global economic recovery.

Alternatively, OPEC+ could break apart over the deadlock. That would likely flood the oil market with supply as producers rushed to take advantage of a lack of quotas, some analysts say. In that scenario, prices would slump as supply outstripped demand.

With futures at their current level, the likelihood is for OPEC+ to find a way to resolve the impasse, Bjarne Schieldrop, commodities chief analyst at SEB said.

“However, with a Brent crude oil price of USD 76/bl the current oil market is too much of a joy to ruin by not finding a solution. We thus think that there will be some kind of compromise in the end where both Saudi Arabia, Russia and the UAE all get a little bit of what they want. But it could certainly drag on for several more days before a deal is reached,” Schieldrop said in a note.

This report has been updated to correct the figure for the proposed output increase.

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S&P 500, Nasdaq close at record highs as mega-cap tech spurs gains

FILE PHOTO: The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New York City, New York, U.S., January 16, 2019. REUTERS/Carlo Allegri
The Charging Bull or Wall Street Bull is pictured in the Manhattan borough of New York City

  • US stocks traded near record highs Monday spurred by tech shares
  • The yield on the US 10-year Treasury note was trading at 1.482%.
  • Bitcoin rose while oil and gold slipped.

US stocks closed mostly higher on Monday, with the S&P 500 and Nasdaq both hitting record highs on the back of gains in mega-cap technology stocks.

Tech companies such as Apple, Amazon, Facebook, and Zoom outperformed. A judge on Monday dismissed antitrust lawsuits by the Federal Trade Commission that were seeking to brand the social media giant as an unlawful monopoly.

Later this week, investors will turn their attention to US non-farm payroll data on Friday. This will give an indication of how consistently the economy is recovering from the pandemic and what that might mean for the outlook for inflation.

Stocks recently have been edging higher thanks to robust economic data, the prospect of more fiscal stimulus, and continued low yields.

The yield on the US 10-year Treasury note was trading at 1.482%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Shares of Intellia Therapeutics soared as much as 63% after the company released promising data from its ongoing phase one trial of a gene-editing CRISPR drug.

Meme stock and Reddit favorite AMC Entertainment climbed higher, surging 10% following a strong weekend at the movies thanks to hot weather and the opening of “Fast and Furious 9”.

Insider is tracking the five top insider stock buys from last week.

More broadly, the US IPO market had its busiest quarter in over 20 years with newly public stocks roaring back after a downturn in May. The second quarter of 2021 saw 113 IPOs raising $39.9 billion, data from Renaissance Capital reveals.

In cryptocurrencies, bitcoin climbed 5.44% to $34,427 while ether spiked 16% to $2,095.

Ether last week saw record outflows of $50 million, the largest since 2015 and a turnaround from a broader trend this year, as a growing number of investors diversify their portfolios away from bitcoin, data from CoinShares show.

Oil prices edged lower, as a spike in COVID-19 cases in Asia stalled a recent rally ahead of this week’s OPEC+ meeting.

West Texas Intermediate crude slipped 1.61% to $72.86 per barrel. Brent crude, oil’s international benchmark, also fell 2.06%, to $74.63 per barrel.

Gold slid 0.20% to $1,778.84 per ounce. The price of the precious metal remains subdued as investors continue to assess the Fed’s policy stance.

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Global stocks tumble, gold slides after the Fed signaled it could hike rates sooner than expected

trader nyse worried chart

Global stocks slid on Thursday morning, as gold prices sank and the dollar strengthened, after the Federal Reserve signaled a rise in US interest rates could come sooner than expected.

US stock futures pointed to a lower open ahead, following losses for the major indexes in the wake of the news. Dow Jones futures were last down 0.46% at 4.55 a.m. E.T., while S&P 500 futures dipped 0.49%, and Nasdaq futures fell 0.69%.

The FOMC’s latest outlook showed more Fed officials are expecting interest-rate rises in 2023, when at its last meeting, no hikes were projected until after that year. Markets interpreted this as a sign the US central bank might be open to letting inflation heat up to help the US economy recover from the pandemic.

“While not a full turn away from ‘transitory’, it was a clear signal that the Fed is open to the idea that some aspects of the recent price increases can be more permanent,” Jim Reid, research strategist at Deutsche Bank, said in a note.

“This was as hawkish as they could have possibly gone at this stage within realistic expectations,” he said.

Also seen as important was that for the first time, Fed officials discussed tapering, or slowing down, its multi-trillion-dollar asset-purchase program, brought in to help the financial system during the COVID-19 crisis.

Yields on the five-year Treasury note, which are highly sensitive to switches in Fed policy, logged the most volatility. The yield jumped to as much as 0.91% from 0.78% immediately before the announcement and closed the day with an 11-basis point increase. By Thursday, it was holding steady around 0.886%.

The US dollar moved higher, while gold prices stumbled by almost 3% on Thursday morning. The metal was last down 2.4%, trading at $1,806.83 an ounce.

“The Treasury and foreign-exchange markets were the main drivers against gold prices following the FOMC decision,” said Thomas Westwater, an analyst at DailyFX. “Given the large drop, bulls may need to wait for more hands to shake out before attempting to make a decisive move higher. That said, price may consolidate in the coming days before the next directional move.”

Oil prices steadied on Thursday, broadly flat after Brent crude broke a five-day rally on Wednesday. Brent was last down 0.03%, trading at 74.37 per barrel, while WTI was unchanged, trading at $72.15 per barrel.

European stock markets followed their US counterparts lower. Frankfurt’s DAX was last down 0.09%, the FTSE 100 in London slipped by 0.51%, and the Euro Stoxx 50 fell by 0.18%.

Asian markets closed out another mixed session. The Japanese Nikkei 225 lost 0.93% while Hong Kong’s Hang Seng index gained 0.19% and China’s Shanghai Composite, which fell earlier in the week on the back of political tensions between China and NATO, regained strength and inched 0.21% higher.

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Stocks slip from records as optimism over economic recovery pauses

Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City
Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City

All three major US indexes ended lower to start the week as investors take a breather from the economic recovery-fueled optimism that sent stocks to record highs on Friday.

Wall Street is now awaiting earnings later this week and key inflation data that’s due Tuesday. Economists polled by Reuters expect the consumer price inflation index to jump 2.5% from 1.7% year on year in February. But there’s a risk that the Fed and economists are unprepared for the magnitude of economic growth and inflation, according to Bank of America.

Semiconductor stocks swerved Monday,with Intel and AMD each falling about 4% after Nvidia announced plans to manufacture its own CPU processor. The news sent shares of Nvidia surging by as much as 4%.

Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:

Canaccord Genuity upgraded Tesla to a “buy” rating on Monday, with analyst Jed Dorsheimer explaining that Tesla’s budding energy storage business has long-term potential. Tesla jumped as high as 3.9%.

Veteran investor Danny Moses compared the stock-market boom to the dot-com bubble, underscored the dangers of excessive leverage and liquidity, and called for the Federal Reserve to temper its stimulus efforts in a recent interview. Here are his 16 best quotes.

Bitcoin rose as much as 2.6% to $61,229 as the crypto world prepares for Coinbase’s direct listing on Wednesday. The surge took the coin close to its all-time high of $61,742 reached on March 1.

West Texas Intermediate crude climbed 0.7%, to $59.71 per barrel. Brent crude, oil’s international benchmark, rose 0.5% to $63.30 a barrel.

Gold slipped 0.8%, to $1,731.70 per ounce.

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How to brace your portfolio for a worst-case scenario in the Suez Canal, according to JPMorgan’s chief global markets strategist

Suez canal ever given
The Ever Given, trapped in the Suez Canal, Egypt, as of Thursday March 25 2021.

  • The massive cargo ship blocking the Suez Canal will send the price of oil skyrocketing, JPMorgan said in a note published Thursday.
  • If not resolved soon, investors can expect shipping rates to soar and energy commodities to further increase.
  • All these risks, however, can be hedged by buying oil, the investment bank said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

The massive cargo ship blocking the Suez Canal and obstructing one of the world’s busiest waterways will send the prices of oil skyrocketing, JPMorgan said in a note published Thursday.

JPMorgan’s chief global strategist Marko Kolanovic said if this situation is not resolved soon, investors and consumers can expect shipping rates to soar, energy commodities to further increase, and global inflation to continue to rise

All these risks, however, can be hedged by buying oil and associated equities such as energy and shipping, Kolanovic said. The strategist highlighted his long-term positive view on oil and energy stocks and his opinion that a supercycle in energy commodities may be under way.

The vessel, called Ever Given, a nearly 200-foot-wide and 1,300-foot-long cargo ship that is taller than the Eiffel Tower, has been horizontally wedged in the waterway for more than two days, despite ongoing efforts to dislodge it. It was on its way to the port of Rotterdam in the Netherlands from China.

Oil prices on Wednesday rose after news of the cargo ship sparked concerns of fuel shortage. West Texas Intermediate crude futures and Brent crude futures surged to their highest since November. The Suez Canal, the second-biggest shipping channel in the world, is a key shipping route for crude and refined products, connecting Europe to Asia.

The incident has captured the news cycle and points to the fragility of the infrastructure that supports global trade.

“Around 10% of global trade shipments pass through the Suez Canal on an annual basis, including crude and refined oil and liquefied natural gas,” Phillip Braun, professor of Finance at Northwestern University, wrote in a note. “This adds one more issue to the global shipping sector on top of the current pandemic.”

Oil analytics firm Vortexa in a tweet on Thursday said: “If flows remain disrupted for more than a few days, some European refiners could run short, particularly of sour crude feedstocks and tighten an otherwise weak physical European market.”

With the blockage, hundreds of cargo ships are now unable to pass through the canal. Many are forced to divert their routes or wait it out, exacerbating the shortages and shipping delays that have already compounded since the pandemic began last year. Companies since then have struggled to keep up with consumers’ demands as Americans locked down at home order goods from Asia.

Major brands such as Nike, Honda, and Samsung at the height of the pandemic have already warned their customers of dwindling supplies, with some halting production of certain products altogether.

In February, oil and natural gas prices have also climbed as the arctic blast that unexpectedly swept through Texas, leaving thousands without power, threw the energy markets in deep turmoil.

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Oil climbs 4% after a grounded container ship blocks key Suez Canal trade route

The tanker is blocking the Suez Canal.

  • Crude oil prices climbed as much as 4% on Wednesday to roughly $60 per barrel, boosted by concern over a supply bottleneck.
  • A container ship is blocking the Suez Canal, which is one of the busiest trade routes in the world.
  • Oil prices have been highly volatile throughout the pandemic and lockdown cycles.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Oil rose as much as 4% on Wednesday after a huge container ship ran aground and blocked the Suez Canal, a key shipping route for crude and refined products. The blockage raised some concern about fuel supply.

Overall, the price of oil is set to fall for the third consecutive week this week. Another round of lockdowns in Europe could threaten the recovery in demand growth and have undermined some of the recent strength in the oil market.

One of the biggest container ships in the canal ran aground early on Tuesday and is stuck at a right-angle to the passage. Hundreds of cargo ships are now unable to pass through the canal, forcing them to divert their routes. It is unclear when the issue will be resolved. “This could have an impact on movement of oil and consumer goods.” Deutsche Bank strategist Jim Reid said in a daily report.

Throughout the pandemic and subsequent cycles of lockdowns and travel bans, oil prices have been highly volatile. Over the last 12 months, Brent crude oil prices have fluctuated from as little as $16 a barrel to as much as $71. As demand for oil, and therefore its price, is inherently linked to sectors that are impacted heavily by lockdown measures, such as travel, they have been sensitive to the developments of the pandemic. Over the last two weeks, prices have fallen by around 12% and are still on course for a third weekly fall, in spite of Wednesday’s rally.

The price response to the hold-up at the Suez Canal may not reflect expectations for a prolonged improvement in demand, analysts said. The futures market has eliminated a bullish structure known as “backwardation” – where prompt contracts trade at a premium to further-out futures contracts, which reflects bullishness among traders and investors about the demand outlook.

“The reprieve seems temporary, though, as the spot price fall overnight has completely removed the backwardation in the oil futures market for prompt deliveries. With speculative markets still long, it seems, oil is likely to be a sell on rallies until Covid-19 and economic recovery sentiment swings back into the black.” Jeffrey Halley, senior market analyst at OANDA, said.

Read more: MORGAN STANLEY: Buy these 10 stocks quickly that will roar higher as M&A heats up – including one with a potential upside of 114%

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