US pre-open: Stocks set for muted open as scepticism creeps in over OPEC deal
US futures pointed to a muted open on Wall Street as market participants grew sceptical about OPEC’s agreement to cut oil production.
At 1110 GMT, Dow Jones Industrial Average futures were flat, while S&P 500 and Nasdaq futures were down 0.1% and 0.2%, respectively.
Meanwhile, oil prices were in the black but well off the highs hit on Wednesday after members of the Organization of the Petroleum Exporting Countries agreed to reduce production by 1.2m barrels a day to 32.5m barrels from January next year.
West Texas Intermediate was up 0.9% to $49.91 a barrel and Brent crude was up 1.1% to $52.41, with analysts sceptical about the deal.
Neil Wilson, senior market analyst at ETX Capital, said there are still lots of doubts about just how good the OPEC deal is.
“We’re yet to see oil break free into territory not touched since the summer of 2015 and it’s uncertain whether this deal will be the catalyst for crude to take a further leg higher. Libya and Nigeria are exempt from the cut and these countries could ramp up production if their domestic conditions allow. OPEC would have to look at this closely in six months’ time if they do.
“Meanwhile compliance is key and it’s worth noting that OPEC members don’t have the best record on that front. Russia says it will cut 300,000 barrels per day but it’s not clear if this is a genuine slice to current output or a reduction in slated production increases.”
He added: “There are lots of pieces in the jigsaw that are yet to fall into place. If OPEC members stick to the script and if non-OPEC comes up with the goods we might be on for further gains in crude. If not this rally could easily lose momentum and fade.”
In corporate news, fashion retailer Guess tumbled in pre-market trade after its quarterly results late on Wednesday missed expectations and it cut its earnings guidance for the year.
Dollar General Corp and Express Inc were due to report earnings ahead of the opening bell.
On the data front, initial jobless claims are at 1330 GMT, while ISM manufacturing and construction spending are at 1500 GMT.
Societe Generale expects the ISM factory index to have inched down slightly in November to 51.6.
“The new orders index of the ISM survey dipped by three points in October to 52.1, which may have led to a reduction in the production component in November. There has been some improvement in the recent regional factory surveys though, and yesterday’s Chicago PMI reached its highest level in almost two years, so there may be an upside risk to our forecast,” it said.