US open: Low oil price drags energy stocks down

US stocks were unchanged on Thursday with low oil prices dragging energy stocks down on the back of higher-than-expected US oil inventory data.

At 1550 GMT, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq were flat.

On news that inventories increased by 8.2m barrels from the previous week to 528.4m on Wednesday, oil stocks fell on fears of oversupply and sparked a sell-off. Oil is currently near levels seen last November when OPEC and Russia agreed to slash output.

West Texas Intermediate was down 1.96% to $49.31 a barrel - the first time oil has been below $50 in 2017, while Brent crude was 1.84% weaker at $52.15.

Oil companies Transocean and Haliburton were down 2.38% and 1.48%, respectively, while the energy sector as a whole fell 0.7% on opening.

Neil Wilson, senior market analyst at ETX Capital said that OPEC warned that the move to cut production could spur US shale producers and that compliance with the cut to output was always a concern.

He said all eyes are on OPEC for its meeting in May on whether the consortium can agree further cuts or if producers desperate for cash pump more to offset falling revenues.

The dollar extended its gains on Thursday on the back ADP employment data, a precursor to Friday’s important non-farm payrolls report, showing that 298,000 private sector jobs were added to the economy well ahead of executions, which according to analysts at Monex Europe was likely to increase already fever-pitch speculation that the Federal Reserve will hike interest rates at its next meeting on 14-15 March.

Analysts at Jefferies said: "A March rate hike is not quite a done deal –a rate hike is never a done deal until it happens—but does appear to be inevitable in the absence of the unexpected emergence of a severe threat that would have to occur in less than two weeks."

The dollar was up 0.16% versus the pound to 0.8231, was down against the euro at 0.9445 and up 0.44% versus the yen to 114.85.

Meanwhile, initial jobless claims rebounded to 243,000 for the week ending 4 March, slightly above the 238,000 consensus forecast and more than the previous week’s unexpected fall to 223,000, the lowest in 44 years. The four-week moving average added 2,250 to 236,500.

The US import price index rose 0.2% in February month-on-month more than the 0.1% expected, while import prices increased 4.6% year-on-year.

On the corporate front, Staples dropped 4.35% after the stationary giant swung to a third quarter close as revenue fell and said it will close 70 stores.

National Beverage Corp climbed 7.36% after beating quarterly earnings expectations.

Sears gained 4.41% after the retailer’s revenue beat expectations and it posted a narrower-than-expected-loss for the quarter.

PPG Industries was down 4.24% after Akzo Nobel rejected a £22.1bn unsolicited takeover offer by the chemicals company.

VeriFone Systems will report earnings after the close.