Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Oil Collapses on Lack of Progress in Production Cuts


Today's financial recap and tomorrow's financial outlook.

The second estimate of third quarter US GDP saw a higher revision, surprising economists, who were expecting a decline. Growth was revised up to a quarterly annualized rate of 3.9% vs. 3.5% in the prior estimate and expectations of 3.3%.

The positive revision came from larger gains in nonresidential investment, inventories, and purchases of durable goods. Less exports caused a lower revision.

Separately, consumer confidence fell to 88.7 in November from 94.1 in the month prior, largely due to drops in lower income earners that may be seeing the optimism from lower gas prices wear off.

Oil fell after an announcement from Russia's state-owned oil company Rosneft's CEO and Venezuela's energy minister that a meeting between four members of OPEC before the larger summit on Thursday did not create any agreement on a production cut. However, all were concerned over the continued drop in oil prices.

Later, the Wall Street Journal reported that Saudi Arabia was preparing to press OPEC members to more strictly adhere to the current production quota of 30 million barrels per day. That would effectively cut production by about 300,000 barrels, which would not be enough to halt the decline in oil prices. Brent crude oil was up as much as 1% before the first batch of news hit, well above $80/barrel, and fell to close down almost 3% for the session.

US equities followed European markets higher in early trading. The small cap Russell 2000 (RUT) was the top performer early on, but that performance waned as oil turned for the worse. The energy sector was the worst performer in the S&P 500 (SPX), down 1.55% for the day. Apple (AAPL), a stalwart of the latest equity advance, turned lower after an intraday reversal. The SPX closed down a few points on the day in what was an otherwise lightly traded day ahead of a winter storm tomorrow in the Northeast.

Treasury yields fell as the 5-year auction saw strong demand after a similar display at yesterday's 2-year auction. Indirect bidders, mostly foreign buyers, purchased 65% of the $35 billion offering, which is the second highest on record. The 5-year yield fell by 3bps to 1.57%.

Tomorrow's Financial Outlook

The economic data calendar for tomorrow is very full due to the holiday-shortened week. We will see October durable and capital goods orders, personal spending and income, the regional Chicago manufacturing survey, and pending and new home sales data. All of this is scheduled for the morning and should provide for some fireworks. The Treasury will sell $29 billion in 7-year notes.

The only relevant piece of economic data scheduled for tomorrow elsewhere in the world is the preliminary report of third-quarter UK GDP growth. Growth is expected to rise 0.7% from the prior quarter, matching the pace of the second quarter. Because of the Bank of England's sensitivity to slow growth, any deviation from expectations could cause a reaction in global fixed income.

Deere (DE) is the only earnings report of note

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos