Wall Street set for higher open as oil prices extend gains

By Abhiram Nandakumar

REUTERS - Wall Street was on track to open sharply higher on Monday as prices of crude oil and other commodities surged, pointing to an uptick in investors' risk appetite following a rout in global markets.

Crude prices were up more than 5 percent after data showed a fall in U.S. rig counts and the International Energy Agency said it expects U.S. shale oil output to fall.

Prices of industrial metals such as Copper and Zinc were also up as investors worried about potential shortages.

Still, oil prices are hovering near $30 a barrel - levels last seen in 2003 - with investors weighing the impact of a potential wave of defaults from energy companies on the financial sector.

The S&P financial sector has been the worst performer among the 10 major sectors this year.

"You've seen oil rebound today, which people are viewing very much as a kind of a green flag in the short-term to take on risk again to a certain degree," said James Abate, chief investment office of Centre Funds in New York.

Abate, however, cautioned Monday's gains should not be seen as the start of a long-term recovery.

"To me, this continues to be a counter-trend rally in the context of an intermediate to longer-term decline in the stock market. Our view is that this is nowhere near the resumption of a bull market," he said.

At 8:30 a.m. ET (1330 GMT), Dow e-minis were up 177 points, or 1.08 percent, with 32,131 contracts changing hands. S&P 500 e-minis were up 20.25 points, or 1.06 percent, with 260,786 contracts traded. Nasdaq 100 e-minis were up 46.25 points, or 1.11 percent, on volume of 32,895 contracts.

Wall Street ended flat on Friday, but gains midweek helped the three major indexes post their best week in 2016.

Investors are also keeping a close eye on the U.S. Federal Reserve for its next move on interest rates.

While Fed Chair Janet Yellen has indicated the central bank would stick to its rate hike program, policymakers appear at odds and traders have all but given up on a hike this year.

Shares of Dean Foods were up 3.8 percent at $21.25 premarket after it posted better-than-expected profit.

Fitbit was up 3.1 percent at $16.08 ahead of its results later in the day.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty)