Oil prices are nervous
Today at around 4:22 AM ET, US crude oil August futures had fallen 0.7% from the last closing level. The G-20 meeting on June 28 and June 29 in Japan and the OPEC Plus meeting on July 1 and July 2 in Vienna might have induced nervousness in oil prices. However, on June 27, China and the US have agreed on a provisional truce on tariff-related issues, a positive development for a growth-driven asset like oil.
Moreover, OPEC output cuts will likely also depend on the outcome of the G-20 meeting. Based on the CME’s OPEC Meeting Outcome Probability tool, there’s a 85.2% chance that OPEC might deepen the oil output cut. The probability has risen in the last few days. The probability of another extension of the 1.2 MMbpd million barrel per day output cut is ~14.8%.
S&P 500 Index and energy stocks
Any upside in the oil and gas prices because of current bullish sentiments could support the S&P 500 Index (SPY). Energy stocks constitute 5.2% of the S&P 500 Index. Moreover, last week, US crude oil has been one of the important factors behind the S&P 500’s rise.
On June 27, energy stocks might take a pause from the previous trading session’s rise. On June 26, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 3.3%, the highest gainer among the energy subsector. The Alerian MLP ETF (AMLP) had the smallest rise of 0.6%.