US pre-open: Futures sharply lower as oil prices surge to multi-year high
Wall Street futures were pointing to more heavy losses ahead of the bell on Monday after oil prices surged to a multi-year high amid the ongoing Russia-Ukraine conflict.
As of 1225 GMT, Dow Jones futures were down 1.02%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.98% and 1.04% weaker, respectively.
The Dow closed 179.86 points lower on Friday as stocks came under renewed selling pressure at the end of the week as traders opted to take some risk off the table ahead of a headline-prone weekend given the grim situation in Ukraine.
Oil prices shot up to their highest level in over a decade prior to the open, with West Texas Intermediate crude futures trading 6.3% higher at $122.96 per barrel, pulling back from $130 per barrel earlier in the day, while Brent crude was up 6.24% to $125.51 per barrel after earlier reaching $139.13 per barrel — the highest level seen since July 2008.
US Secretary of State Antony Blinken stated the US and allies were mulling over putting a ban on all Russian oil and natural gas imports in response to Moscow's attack on Ukraine, while House Speaker Nancy Pelosi said the chamber was "exploring strong legislation" to ban the import of Russian oil as part of an effort to "further isolate Russia from the global economy".
Gas prices also hit their highest level since 2008, with the national average hitting $4.06, but the yield on the benchmark 10-year Treasury note was only slightly higher at 1.72%.
"The prospect of fresh sanctions on Russia, and moves to ban the purchase of commodities supplied by that country, is driving up prices of oil, gas, wheat, nickel, copper, and others, in some cases to new all-time highs, not least because supply of many of these precious raw materials was already tight," said AJ Bell's investment director Russ Mould.
"In response to a collapse in commodity prices, and some spectacularly overpriced and failed acquisitions, miners have cut back on capital investment and spending. They have focused instead on reducing debt and then returning any surplus cash to shareholders. As a result, it could take a long time for supply to catch up with demand, especially if Russian supply is excluded from markets for a long time, at least providing the global economy remains on track.
Over the weekend, planned evacuations from the cities of Mariupol and Volnovakha on Saturday were scrapped after Russia violated a humanitarian ceasefire agreement, with fighting carrying on in or around both cities, while Mariupol City Council also said on Sunday that Moscow had again violated a second temporary cease-fire that would've enabled civilians to flee the area.
Civilians attempting to flee the town of Irpin, outside of Kyiv, were also killed, including a family of four with two young children, as they were "bombarded" with shells, leading UK prime minister Boris Johnson to brand the invasion as having sunk further into "a sordid campaign of war crimes and unthinkable violence against civilians".
On the macro front, January consumer credit change figures were scheduled for publication at 2000 GMT.
In the corporate space, H&R Block and Del Taco will both report earnings on Monday.