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Crude Oil Prices Pressure Energy Sector and the S&P 500

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The S&P 500’s performance 

The S&P 500 fell ~0.2% to 2,721.3 on May 25 due to lower crude oil prices dragging down energy stocks. Six of the ten key sectors in the S&P 500 fell on May 25, and the SPDR S&P 500 ETF (SPY) fell ~0.2% to $272.20.

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The S&P 500’s sector-wise performance

The energy, material, and financial sectors, which fell 2.6%, 0.5%, and 0.3%, respectively, on May 25, pressured the S&P 500 the most. The energy sector accounts for ~6.4% of the S&P 500. The Energy Select Sector SPDR ETF (XLE) fell ~2.6% to $74.60 on May 25. Equity and commodity market sentiments are related depending on the magnitude of moves and various fundamental factors affecting each market.

Commodities

July WTI crude oil futures fell 4% to $67.88 per barrel on May 2, marking the largest one-day percentage drop since July 5, 2017. On May 25, it was announced that Russia’s and Saudi Arabia’s production cuts could be eased, and this news pressured oil prices. The United States Oil ETF (USO), which follows active WTI oil futures’ performance, fell ~4.3% to $13.70 on May 25.

On May 25, June US natural gas futures fell 0.03% to $2.94 per MMBtu (million British thermal units). The contracts are set to expire on May 29. July US natural gas futures fell 0.3% to $2.96 per MMBtu, and the United States Natural Gas ETF (UNG), which follows active natural gas futures, fell 0.2% to $23.97. The iShares S&P GSCI Commodity-Indexed ETF (GSG) fell 1.9%.

Series overview

In this series, we’ll cover US gasoline demand and Cushing inventories. We’ll also cover the US crude oil rig count and some drivers for oil prices this week.

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