By Peter Nurse
Investing.com - U.S. stocks are seen opening marginally lower Tuesday, starting the new holiday-shortened week on a cautious note as oil prices rise after a group of top producers failed to agree on production levels.
Crude prices rose to their highest levels in nearly seven years Tuesday the day after talks between the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, broke down without agreement on a deal to boost production.
This lack of new output threatened to tighten the demand/supply balance as economies reopen around the globe, pushing prices higher and adding to near-term inflationary pressures that threaten to undermine the global economic recovery.
At 7 AM ET, U.S. crude futures traded 1.8% higher at $76.50 a barrel, reaching its highest level since November 2014, while the Brent contract rose 0.3% to $77.40, climbing to its highest point since late 2018.
Still, stock market losses are likely to be limited, with the main indices near record levels, helped by a successful vaccination program, healthy economic data and strong corporate earnings underpinned by massive levels of monetary and fiscal stimulus.
Wall Street was closed on Monday after a long weekend to celebrate Independence Day, but Friday’s June jobs report , where 850,000 jobs were created, added to the underlying positive tone.
The economic data slate Tuesday centers around the release of the ISM index of service industry activity . It is expected to show continued strong growth after hitting a record high in May, but could also underline ongoing labor market constraints.
In Europe earlier Tuesday, Eurozone monthly retail sales 4.6% on the month in May, more than expected, driven mostly by purchases of non-food products and car fuel, while investor sentiment in Germany dropped in July, but remained at a very high level. A greater source of concern may be the surprise 3% drop in German factory orders in May, given the importance of the sector for the Eurozone economy.
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