US pre-open: Stocks seen slightly higher despite weak oil prices

US futures pointed to a slightly firmer open on Wall Street despite declining oil prices, as investors looked ahead to Federal Reserve Chair Janet Yellen’s speech at Jackson Hole at the end of the week.

At 1110 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.2%, while Nasdaq futures were 0.3% higher.

At the same time, oil prices remained under pressure as hopes of a production freeze faded and amid reports that Iraq – OPEC’s second-biggest producer – was set to ramp up its exports. West Texas Intermediate was down 3% at $47.05 per barrel and Brent crude was 0.9% lower at $48.73.

Goldman Sachs stuck to its forecasts that oil would remain at $45-$50 a barrel through next summer. “We reiterate our view that the oil price and fundamental recovery remains fragile,” the bank said.

Goldman said that while oil prices have rebounded sharply since the beginning of this month, the upward move was driven by better oil fundamentals but rather by headlines around a potential output freeze and a weaker dollar.

"A deal to freeze production when OPEC and some non OPEC producers meet in Algeria on September 26-28 is possible in our view, after six failed attempts, as it would show signs of cooperation from Saudi’s new energy minister. But the possibility may not be high – Russia’s energy minister commented on August 8 that he did not see the basis for such a free.”

Investors were also looking ahead to Yellen’s speech on Friday in the hope she will provide further clues on the timing of an interest rate hike.

Oanda’s Craig Erlam said: “Yellen’s speech on Friday remains the headline event this week and I think we could continue to see an element of caution in the markets in the lead up to this. Investors are still not buying a 2016 rate hike, even following Stanley Fischer’s comments over the weekend regarding the economy – markets now marginally pricing in February - so the probability that Yellen says something that goes against what’s priced in seems quite high.

“The only question is whether she’ll strongly hint at a hike this year or indicate that holding off to early next year may be warranted, at which point markets would push the hike right back once again.”

In corporate news, restaurant chain Zoe’s Kitchen tumbled in pre-market trade after it said late on Monday that it was cutting its guidance for the fiscal year.

Housebuilder Toll Brothers nudged higher in pre-market trade after posting a 58% rise in third-quarter profit.

Wells Fargo was likely to be in focus after the Consumer Financial Protection Bureau said it has fined the bank $3.6m for illegal student loan servicing.

Best Buy was also due to report earnings on Tuesday.

On the data front, investors will eye the release of Markit’s preliminary manufacturing purchasing managers’ index at 1445 BST and new home sales at 1500 BST.