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Oil Prices Dip as Investors Take Profits, Eyes on Israel-Hamas Conflict and Industry Reports

Oil prices experienced a decline in Asian trading on Monday as investors opted to take some profits following significant gains in the previous week. Attention now shifts towards developments in the Israel-Hamas conflict and signals from key industry reports. Trading activity remained subdued due to market holidays across much of Asia for the Chinese New Year.

Brent oil futures for April delivery slipped by 0.5% to $81.78 per barrel, while West Texas Intermediate crude futures dropped by 0.6% to $76.35 per barrel by 20:20 ET (01:20 GMT). Both contracts had surged approximately 5% to 6% during the past week.

Oil prices had surged notably after Israel rejected a ceasefire proposal from Hamas and continued its airstrikes on the Gaza Strip, signaling limited de-escalation in the conflict. Traders responded by factoring in a higher risk premium associated with the war.

The Israel-Hamas conflict has provided significant support for oil prices in recent months, particularly as concerns grew about potential disruptions to global oil supplies. Additionally, disruptions in shipping activity caused by attacks from the Iran-aligned Houthi group in the Red Sea added to market uncertainties.

Despite a rebound in U.S. production to record highs in February following weather-related disruptions, concerns over the Middle East have largely overshadowed these developments. Moreover, several refinery closures for maintenance tightened U.S. fuel supplies, leading to a nearly 9% increase in gasoline futures during the previous week. However, doubts lingered over whether this trend would persist, considering the potential weakening of U.S. fuel demand during cold weather spells.

Looking ahead, the Organization of Petroleum Exporting Countries (OPEC) is scheduled to release its monthly report on Tuesday, followed by the International Energy Agency’s (IEA) report on Thursday. Market participants are awaiting these reports with some uncertainty regarding potential revisions to oil demand forecasts for 2024 and 2025, particularly amid expectations of sustained pressure on demand due to higher U.S. interest rates.

Further insights on U.S. interest rates are anticipated from key inflation figures set to be released on Tuesday. Expectations suggest that U.S. consumer price index inflation remained elevated in January, providing the Federal Reserve with added motivation to maintain higher rates for an extended period.

US Stock Futures Hold Steady After Record-Setting Week, Eyes on Economic Data and Earnings

US stock futures hinted at a relatively stable start to the trading week on Sunday evening, following a week marked by record-setting performances in the broader S&P 500 index.

As of 6:30 pm ET (11:30 pm GMT), Dow Jones Futures, S&P 500 Futures, and Nasdaq 100 Futures showed a slight decline of 0.1%.

Investors are gearing up for a week packed with significant economic data releases, including key CPI and PPI figures, retail sales data, and the Michigan consumer sentiment index.

Moreover, market participants will closely monitor speeches by several Federal Reserve officials, including Bowman, Barkin, Kashkari, Bostic, Barr, and Daly. These speeches often offer valuable insights into the central bank’s stance, influencing market sentiment.

Furthermore, the earnings season enters its fourth week, with notable companies such as Coca-Cola Co (NYSE:KO), Airbnb Inc (NASDAQ:ABNB), Zoetis Inc (NYSE:ZTS), Cisco Systems Inc (NASDAQ:CSCO), Applied Materials Inc (NASDAQ:AMAT), and Deere & Company (NYSE:DE) scheduled to report their financial results.

Last Friday, the S&P 500 closed above the historic 5,000 level, registering a gain of 0.57%. The NASDAQ Composite, focused on technology stocks, also saw a notable increase of 1.25%. Conversely, the Dow Jones Industrial Average experienced a slight decline of 0.14%, shedding 54.46 points.

In the bond market, the yield on United States 10-Year Treasury notes stood at 4.177%.

The Barbey Family, Descendants of VF Corp Founder, Back Activist Investor Engaged Capital for Board Seats

In a bid for accelerated transformation at VF Corp (NYSE:VFC), which owns renowned brands like the North Face, Vans, and Timberland, Engaged Capital has garnered support from the founding family, as per a descendant’s statement to Reuters.

Kelly Barbey, a member of the Barbey family, revealed that Engaged Capital, holding a 1.3% stake in VF, has secured the backing of descendants of John Barbey, the company’s founder in 1899. Currently, Barbey family members collectively possess around 15% of VF.

Expressing their stance, the Barbey family aims to replace two directors on VF’s 12-member board, specifically targeting Clarence Otis, a director since 2004, and Juliana Chugg, a director since 2009. They attribute VF’s recent challenges to the alleged failure of these directors to adequately address the company’s issues.

Over the past year, VF shares have depreciated by 42%, significantly underperforming the S&P 500 Apparel, Accessories & Luxury Goods index, reflecting struggles in enhancing brand appeal amidst consumer spending cutbacks.

Engaged Capital, under the leadership of hedge fund veteran Glenn Welling, has previously influenced VF’s cost reduction efforts and exploration of strategic options, including divesting non-core brands. Recently, VF announced certain organizational changes.

Reportedly, the hedge fund has identified individuals with expertise in the retail sector and turnaround strategies as potential director candidates. The deadline for director nominations looms on Tuesday.

While Engaged Capital has been advocating for VF’s transformation since October, the revelation of support from the Barbey family is novel. The response from VF to the family’s demands remains uncertain.

After the excitement of Super Bowl Sunday fades, it’s time to switch from analyzing touchdowns to tracking market trends. Just as quarterbacks strategize their plays, savvy investors know the game plan: diversify, stay informed, and be ready to pivot when necessary. So, grab your playbook and tackle those investment opportunities like a seasoned pro. After all, in the game of finance, every day is game day!