Sector movers: Big Oil drops amid caution around US debt ceiling, soft Chinese data
By Alexander Bueso
Date: Tuesday 30 May 2023
(Sharecast News) - Big Oil was the main drag on the FTSE 350 at the start of the week as investors showed caution ahead of a key vote scheduled for the next day in the US House of Representatives on raising the government's debt ceiling deal.
At the weekend, President Biden and House speaker Kevin McCarthy had reached an agreement on doing so but holdouts in both parties were thought to still be a risk.
The ensuing caution served to push longer-term UK gilt yields lower, thus propping up the likes of Electricity, Utilities and Precious Metals and Mining.
However, in parallel crude oil traders pushed front-dated Brent futures down by 3.34% to $73.73 a barrel on the ICE.
Some market commentary was also referencing what were described as mixed messages out of OPEC+ officials ahead of their 4 June ministerial meeting to decide on their output levels.
"Oil prices are slipping on Tuesday as traders weigh up the prospects of another OPEC+ cut this weekend. Russia's Novak last week appeared to play down the prospect of another reduction shortly after traders were warned to "watch out" by the Saudi energy minister, who hinted at another "ouching" for short-sellers," said Craig Erlam, senior market analyst at Oanda.
"It seems Novak's words have carried more weight in the markets as traders determined that no alignment of thought will mean no deal. That may prove a little naive given the sway that Saudi Arabia holds. With prices not far from their March and May lows, we may soon see just how influential the Saudis still are."
Figures published over the weekend showing a 20.6% year-to-date drop in Chinese industrial profits were another factor in oil's decline.
Top performing sectors so far today
Electricity 11,234.12 +1.26%
Non-life Insurance 3,306.25 +1.20%
Gas, Water & Multiutilities 6,189.97 +1.18%
Precious Metals and Mining 10,982.91 +0.77%
Real Estate Investment Trusts 2,174.62 +0.72%
Bottom performing sectors so far today
Beverages 26,386.63 -2.61%
Oil, Gas and Coal 7,938.06 -2.54%
Tobacco 28,456.86 -2.49%
Personal Care, Drug and Grocery Stores 4,189.99 -2.42%
Pharmaceuticals & Biotechnology 21,182.73 -1.93%
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