U.S. Stock Futures Retreat as Oil Prices Jump

U.S. stock futures fell and haven assets like gold and the Japanese yen gained after a weekend attack on Saudi Arabian oil facilities sent crude prices surging. Brent crude, the global oil benchmark, jumped as much as 19.5% to $71.95 a barrel, one of its largest intraday gains in years, and was recently trading up 8.6% at $65.39 a barrel. The rise came after attacks on Saudi oil production facilities Saturday, which knocked out 5.7 million barrels of daily production. The kingdom is racing to restore roughly one-third of the disrupted production by day’s end Monday. On Sunday, President Trump said he authorized the release of oil, if needed, from the Strategic Petroleum Reserve to help offset cost increases. The U.S. holds about 600 million barrels of emergency crude products, said

Oswald Clint,

a senior analyst for Sanford C. Bernstein & Co. Gold was up 0.8% and the Japanese yen rose 0.2% against the U.S. dollar. “If oil prices are out of control, it’s obviously a negative for equities,” said Weiqi Zhu, a fund manager at Gao Zheng Asset Management in Hong Kong. Mr. Zhu said higher oil prices could push up inflation and prompt the Federal Reserve to think twice before cutting rates again. However, he said Mr. Trump’s oil-release authorization helped calm other markets in the short term.

The oil price rise came after attacks on Saudi oil production facilities Saturday. Above, a poster of Saudi Crown Prince Mohammed bin Salman.


Amr Nabil/Associated Press

A sustained increase in fuel prices could be the latest threat to a world economy that is already under pressure from the U.S.-China trade dispute. It could weigh on consumer spending as higher energy prices can raise gas and heating bills, cutting into available incomes. The currencies of oil-producing countries strengthened against the U.S. dollar, with the Russian ruble up 0.8%, the Norwegian krone up 0.4% and the Canadian dollar up 0.2%. In Europe, the Stoxx Europe 600 fell 0.6%, with losses spread across most regional indexes. An exception was Norway’s Oslo All-Share, which rose 0.8%.

Air France-KLM

fell 4.4% on the oil price surge. The airline is less hedged than other legacy carriers, said Alex Irving, a chartered financial analyst for Sanford C. Bernstein & Co. In hedging, carriers enter into future contracts that lock in the price of oil, shielding them from short-term volatility. In the U.S., futures on the S&P 500 dropped 0.5%. The contracts don’t necessarily predict moves after the opening bell. In Asia, regional equity markets proved relatively resilient. South Korea’s Kospi rose 0.6% and the Shanghai Composite was flat. The Japanese stock market was closed for a holiday.

Hao Zhou,

a foreign-exchange and emerging markets analyst at Commerzbank in Singapore, said growing optimism over the U.S.-China trade dispute helped offset the effect of oil market disruption. “In general, the trade talk hope has helped the markets,” he said. “It’s very difficult to project the impact from oil and any short term supply shock.” In Hong Kong, the Hang Seng Index fell 1.1% after another weekend of violent protests, although shares in Chinese oil companies such as


and PetroChina Co. rallied.

Kerry Craig,

a global market strategist at J.P. Morgan Asset Management, said oil producers could dip into stockpiles, which would help stabilize prices. “The bigger issue is what premium markets will build in to reflect the risk of further attacks,” he said in a note to clients. The Fed is scheduled to meet this week and markets are pricing in another interest-rate cut of a quarter point. “Central banks are likely to look through the inflationary impacts of higher oil prices but the added geopolitical risk to an already fragile backdrop will not go without notice,” Mr. Craig said. The yield on the 10-year U.S. Treasury note fell to 1.870%, down slightly from Friday afternoon’s 1.901%. Last week it rose the most since June 2013. Bond yields and prices move in opposite directions. —Frances Yoon contributed to this article. Write to Steven Russolillo at steven.russolillo@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

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