Oil price sinks to US$66
A sharp drop in crude prices tugged down shares in oil and gas companies on Friday, leading the Standard & Poor's 500 index to a slight loss in a short trading session.
The index, a benchmark for many investments, still closed out November with its third-best month this year.
"Crude is the big story today," said JJ Kinahan, TD Ameritrade's chief strategist. "There are very clear winners and losers. The Chevrons and Exxons of the world are getting hammered. Then on the other side you have the shipping companies — UPS and FedEx — along with the airlines. For them, it's a beautiful story."
The S&P 500 index lost 5.27 points, or 0.3 per cent, to close at 2,067.56. As a group, energy companies lost six per cent, the worst drop of the 10 sectors in the S&P 500 by far.
The Dow Jones industrial average inched up 0.49 of a point, a sliver of a per cent , to eke out another record high, 17,828.24. The Nasdaq composite picked up 4.31 points, less than 0.1 per cent, to 4,791.63.
Regular US trading closed at 1 p.m. Eastern time on Friday and the market was shut Thursday for the Thanksgiving holiday.
PROCESS HIT HARD
The main news driving trading was a decision made Thursday by the OPEC oil cartel to keep production at 30 million barrels a day. That announcement hit oil prices hard as traders expect the global supply of oil to stay high.
Crude oil slumped US$7.54, or 10 per cent, to settle at US$66.15. Brent crude, an international benchmark, was at $72.50 a barrel on Friday, down nearly 30 per cent in the past three months and at its lowest in four years.
The recent slide for oil prices has had a double-edged effect on the market. It has given a boost to airlines, shippers, retailers, and cruise lines, which benefit from both falling costs and customers having more money in their pockets to spend. But it has battered drillers, producers, and other companies that provide services to the oil and gas industry.
COMPANIES PULLED DOWN
Around the world, the slide in crude prices pulled oil and gas companies down. Newfield Exploration lost 16 per cent and QEP Resources 15 per cent, the two steepest drops by any company in the S&P 500 index.
In Asia, China's state-owned oil giant CNOOC, the country's biggest crude producer, plunged. In Europe, shares in Royal Dutch Shell, Total, and other energy giants fell.
"The template for equity markets today has been clear from the beginning," said Alastair McCaig, market analyst at IG. "Oil and energy manufacturers are down, while those companies that are oil consumers are up."
In government bond trading, prices for 10-year Treasurys rose. The yield, which moves in the opposite direction, fell to 2.17 per cent.
In metals trading, the price of gold for February delivery lost US$22 to US$1,175.50 an ounce, and silver for March fell US$1.05 to US$15.56 an ounce. Copper for March fell 11 cents to US$2.85 a pound.
In other energy futures trading on the New York Mercantile Exchange, January natural gas fell 27 cents to US$4.09 per 1,000 cubic feet.