S&P 500, Dow Drop as Crude Closes at April Low
New York (Aug 1) Crude oil was deadweight for Wall Street on Monday as continued worries over an international supply glut kept commodity traders bearish. The S&P 500 and Dow Jones Industrial Average both posted losses as crude's selloff dragged the energy sector heavily into the red. The S&P 500 fell 0.13% and the Dow slid 0.15% A rally in biotech helped the Nasdaq remain positive for the day, closing with gains of 0.43%.
Crude oil prices tumbled on Monday as worries over a domestic supply glut continued to spook commodity traders. A read on oil-rig activity in the U.S. on Friday marked the fifth weekly increase in a row.
Worries over an international glut also kept commodity markets under pressure. Iran's oil minister Bijan Namdar Zanganeh noted that the oil market is being squeezed by supply issues. The Organization of the Petroleum Exporting Countries' oil production climbed to roughly record highs in July as Iraq upped its output, according to a Reuters survey on Friday.
"Rising OPEC crude oil production risks postponing the much-anticipated rebalancing of the global petroleum market, adding to the risk of what we think could be an intermediate-term correction down to the $35 per barrel area, as an echo of a similar 2015 slide," Tim Evans, energy futures specialist at Citi, wrote in a note.
West Texas Intermediate crude closed 3.9% lower at $39.99 a barrel on Monday, closing at its lowest since April. The commodity had slipped below $40 a barrel earlier in the session.
The energy sector was the worst performer on markets Monday. Major oilers Exxon Mobil (XOM) , Royal Dutch Shell (RDS.A) , Chevron (CVX) , Total (TOT) and BP (BP) were all lower, while the Energy Select Sector SPDR ETF (XLE) fell 3.3%.