Wall Street stocks were set to decline Monday after a meeting of major oil producers in Doha, Qatar failed to reach an agreement on a production freeze, triggering a sharp slide in oil prices. On the bright side, stock futures trimmed a deeper rout seen early in Europe's session, triggered by what was a near-6% drop in U.S. crude futures prices at one point.
The oil producers that supply nearly half the world's output met on Sunday but failed to reach a deal on output, which markets had been hoping for. The meeting faltered after Saudi Arabia reiterated its demand that Iran take part in any deal to freeze production. Over the past year, stocks have closely followed moves in crude futures because they offer signs of the global economy and banks, which have large exposures to oil-and-gas firms.
"It is possible that we've seen the worst of the initial reaction to the failure to achieve a deal in Doha, but I do think further downside could follow in the coming weeks," said Craig Erlam, senior market analyst at Oanda, in emailed comments.
"I think energy companies will remain under pressure today and while that could weigh on U.S. stock markets, we could see them recover overall, as they have at times over the past month when they've continued to push on even when oil has been falling," said Erlam.