A major selloff in crude oil prices on Wednesday bled into the energy sector and kneecapped upward momentum on Wall Street.
The S&P 500 was down 0.07%, the Dow Jones Industrial Average was flat, and the Nasdaq slid 0.02%.
Losses in crude oil prices picked up speed on Wednesday after a surprise increase in domestic crude stockpiles. Inventories rose by 3.3 million barrels in the past week, the Energy Information Administration said, surprising analysts looking for a decrease of 3.5 million barrels. Gasoline and distillates stockpiles both increased.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks with serious upside potential in the next 12-months. Learn more.
Adding to risks, on Tuesday the EIA reduced its price forecast for oil next year. The energy watchdog now anticipates West Texas Intermediate to average $53.61 a barrel over 2018, 2.7% than its former target, though 2017 price forecasts were increased by 0.2% to $50.78. The EIA also nudged its 2018 U.S. production targets higher.
Commodities have been under pressure this week after Saudi Arabia led a group of allies to cut diplomatic ties with Qatar for its alleged association with terrorism. The effect on a recently extended production cut agreement among Organization of Petroleum Exporting Countries is not yet known.
West Texas Intermediate crude was down 4.9% to $45.86 a barrel on Wednesday.
You can’t expect a real panic to liquidation to begin until oil reaches $43 a barrel, Cramer argued on Real Money. Get his insights with a free trial subscription to Real Money.
The energy sector was the worst performer on markets Wednesday. Major oil companies Exxon Mobil (XOM) , Chevron (CVX) , BP (BP) , ConocoPhillips (COP) and Occidental Petroleum (OXY) sported major losses, while the Energy Select Sector SPDR ETF (XLE) declined 1.8%.