The Russians are coming, the Russians are coming… coming back to the energy market that is.
Crude oil futures (@CL) fell almost 3 percent today, their biggest drop this month, as traders brace for OPEC’s next meeting a week from now. The big worry is Russia wanting to add 1.5 million barrels of crude back into global markets.
Some readers may have forgotten that Moscow only agreed to work with the cartel two years ago following a brutal selloff in oil. Crude’s up about 40 percent since then and the global economy’s improved. That creates less reason for the coalition to stick together.
Investors are also dumping energy-related stocks ahead of the meeting. The SPDR Energy ETF (XLE) is the worst-performing major sector fund this week, dropping more than 3 percent. The Market Vectors Oil Services ETF (OIH), a higher-volatility portfolio tracking the sector, is down more than 5 percent.
In conclusion, worries about OPEC’s June 22-23 powwow in Vienna is casting a major pall over the energy market right now. Traders may want to expect even more volatility next week.