US stocks remained flat today (November 28th) despite crude oil price's ongoing slide as Wall Street reopened after the Thanksgiving holiday. At 9:52 ET, the Dow Jones industrial average rose 0.19 per cent to 17,860.99, the S&P 500 lost 0.15 per cent to 2,069.69 and the Nasdaq Composite added 0.09 per cent to 4,791.55.
Shares of energy producers led equities. Bonds advanced, setting record-low yields from Japan to Germany, and the dollar gained. Major indexes are on track for their sixth straight weekly advance, the S&P's longest streak since November 2013.
Crude plunged 5.9 per cent to $69.38 (£44.3) per barrel a day after the Organization of Petroleum Exporting Countries (Opec) decided not to cut output, which could leave markets oversupplied.
"Crude seems to have no floor right now, and we could easily see the price drop into the low $60s," Tony Roth, chief investment officer at Wilmington Trust in Wilmington, told Reuters.
The Opec kept its production ceiling unchanged at 30 million barrels for the next six months.The decision comes after a lenghty meeting of its dozen members – despite a global supply excess that has sent crude prices to a four-year low. This global surplus is due to ongoing US production and Opec supplies ahead of targets, along with a slowdown in demand in China and Europe.
Suhail bin Mohammed al-Mazroui, UAE oil minister, said the market would “fix” prices. "I don’t think we should panic. There is nothing that should cause us to panic," he added, quoted by the Financial Times.
However, a Russian oil tycoon told Bloomberg that the Opec policy on crude production will ensure a crash in the US shale industry, arguing that the organisation was responding to a surging supply from US shale fields.
"American producers risk becoming victims of their own success. At today’s prices of just over $70 a barrel, drilling is close to becoming unprofitable for some explorers," said Leonid Fedun, vice president and board member at OAOLukoil.
“In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again," he added.
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