US open: Energy shares drag US indices lower as oil continues to fall

Renewed selling pressure in the energy sector sent US stocks lower on Wednesday after OPEC cut its forecast for demand in 2015, sending crude prices to fresh five-year lows.

By 10:09 in New York, the Dow Jones Industrial Average and S&P 500 were 0.7% lower, while the Nasdaq fell 0.5%, with the Dow continuing to pull back after coming close to the psychological milestone of 18,000 last week.

"It is unclear at the moment whether the Dow and dollar’s downturn is purely due to the worldwide bearish sentiment, or whether investors have become unwilling to take the risks required to continually push these markets to new highs," said analyst Connor Campbell from Spreadex.

He said that an "answer may be provided tomorrow" with Thursday's release of US retail sales and unemployment claims.

Producers such as Anadarko Petroleum, Devon Energy, Chevvron, Occidental Petroleum, Conocophillips and Marathon Oil were suffering heavy losses in morning trade.

Meanwhile, Goodrich Petroleum dropped sharply after saying that it is looking to sell its shale assets in South Texas.

OPEC estimated that demand for its oil would total just 28.92m barrels per day next year, around 280,000 barrels less than its previous forecast and less than the 29.4m barrels a day in 2014. In its most recent monthly report, OPEC said output totalled 30.05m barrels a day in November, 390,100 barrels less than in October.

Brent crude was trading 2.5% lower at $65.18 a barrel, having dipped below the $65 mark for the first time since mid-2009, while West Texas Intermediate fell 3% to $61.91 a barrel.

Given the OPEC announcement, data on US crude inventories was being closely watched on Wednesday. Data revealed that crude stockpiles actually increased by 1.45m barrels in the week to 5 December, compared with a 3.69m drop previously and expectations for a 2.70m fall.