Joe Rennison in New York
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Energy companies slid on Monday alongside lower oil prices, as doubts linger over further global production cuts ahead of a key meeting of oil-producing nations.
Marathon Oil, Range Resources and Devon Energy led losses for the S&P 500 energy sector, falling 2.9 per cent to $14.62, 2.8 per cent to $17.52 and 2.6 per cent to $37.69, respectively.
The energy sector had lost 0.4 per cent as it was heading into midday in New York, kicking off the week as the worst performing sector in the index.
The slide on Monday follows a loss of 3.4 per cent for the sector last week.
The price of Brent crude hit a 28-month high of $64.27 a barrel this month but has since slid back 3.7 per cent to $61.89, with a 1.3 per cent decline on Monday alone.
Last week marked the first weekly loss for the commodity’s price since early October.
It comes ahead of a meeting of Opec on November 30, where the possible extension of production cuts that are due to expire in March 2018 are set to be discussed.
Despite broad expectations that an extension will be agreed, there are concerns that Russia might not support Opec’s plans when the cartel meets at the end of the month, contrasting against Saudi Arabia’s energy minister who voiced support for an extension last week.
In addition, last week the International Energy Agency warned that the growth of US oil output until 2025 would be the fastest seen by any country in the history of crude markets, expanding by 8m barrels a day between 2010 and 2025, further adding to investor angst.
Michael Tran, director of energy strategy at RBC Capital Markets, said investors were likely looking to reduce their exposure to oil markets, locking in the recent price gains heading into the end of 2017.
“It has been a difficult year for commodity investors and now we are nearing the end of the fiscal year I think the rebound in oil prices over the past number of weeks has given investors a bit of breathing room,” he said.
“I think with the price weakness today, it could be as simple as squaring books ahead of the Opec meeting,” he added
The broader stock market managed to hold on to modest gains heading into the New York afternoon.
The S&P 500 rose 0.1 per cent to 2,582, led by gains in the telecoms sector that has staged a modest rally in recent trading sessions, having suffered heavy losses over the course of the year.
The Dow Jones Industrial Average gained 0.4 per cent to 23,440 and the Nasdaq Composite climbed 0.1 per cent to 6,789.