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The energy sector (NYSEARCA:XLE) was Wednesday’s worst performer, -1.4%, weighed by a nearly 3% drop in WTI crude oil futures and a 3.5% drubbing in Exxon Mobil (XOM) shares after the company announced a $59.5B all-stock acquisition of Pioneer Natural Resources.
Prices extended losses after The New York Times reported U.S. intelligence believes Iran was surprised by Hamas’ attack on Israel, which if true could reduce the chances of additional sanctions on Iranian oil and help prevent a wider Middle East conflict.
The story appears to contradict a report earlier this week from The Wall Street Journal that Iranian military officials helped plan and coordinate the attack.
Bloomberg reported Wednesday that the Biden administration is considering the possibility of re-freezing $6B in Iranian oil money that was released as part of an earlier prisoner swap, a deal that is attracting growing bipartisan criticism.
Saudi Arabia said on Tuesday it was working with regional and international partners to prevent an escalation of the Israel-Hamas war while reaffirming efforts to stabilize oil markets.
Front-month Nymex crude (CL1:COM) for November delivery closed -2.9% to $83.49/bbl, while December Brent crude (CO1:COM) finished -2.1% to $85.82/bbl.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
“The road for the global growth recovery is getting rockier,” Oanda’s Edward Moya said, noting the “U.S. consumer is weakening [and] Germany might be headed for a deeper recession.”
Germany’s government said it expects the economy to contract by 0.4% this year because of high inflation.
