Oil and gas slumps to bottom of S&P leaderboard as crude falls 3%
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The oil and gas sector (NYSEARCA:XLE) lost the most ground among S&P sectors in Wednesday's trading, as crude oil futures fell to two-week lows on concerns about demand and the Federal Reserve's aggressive rate hikes.
Energy stocks sold off sharply after the Federal Reserve raised interest rates by 75 basis points, and the U.S. Energy Information Administration reported a surprise build in crude oil inventories.
Meanwhile, gasoline demand in the U.S. fell to its lowest seasonally since 2013, with the exclusion of 2020 when demand plummeted due to COVID lockdowns, but U.S. crude production edged 100K bbl/day higher to 12M bbl/day, its highest level since April 2020.
U.S. West Texas crude (CL1:COM) for July settled -3% to a two-week low $115.31/bbl after dropping to a low of $114.60, while Brent crude (CO1:COM) closed -2.2% at $118.51/bbl after falling as low as $117.75.
Four of the day's five biggest losers on the S&P 500 were energy names: (VLO) -4%, (SLB) -3.9%, (MPC) -3.6%, (BKR) -3.6%.
Other large losers included (PBF) -3.4%, (DVN) -3%, (EOG) -2.9%, (OXY) -2.9%, (HAL) -2.9%, (MRO) -2.5%.
Other ETFs include: (USO), (NYSEARCA:XOP), (VDE), (OIH), (IEO), (CRAK)
"There is growing angst under the bull thesis and each data point is going to be heavily scrutinized for evidence of demand falling off," Rebecca Babin of CIBC Private Wealth Management told Bloomberg, which "leaves the market susceptible to both large moves higher and lower as investors are on a knife's edge."
Also hurting sentiment, President Biden lashed out at U.S. refiners, urged the companies to expand capacity while also accusing them of reaping excess profits as the public pays record prices at the pump.