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|17 January, 2019

Thursday outlook: Oil prices drop on higher U.S. production

Oil prices fell on Thursday after the EIA said that U.S. crude production reached a record high. Asian shares edge lower on worries China's economic outlook and uncertainties in the U.K. More commentary on Middle East markets, currencies and precious metals

Image used for illustrative purpose. Petroleum Production platform in offshore in oil industry.

Image used for illustrative purpose. Petroleum Production platform in offshore in oil industry.

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  • Oil prices drop on record U.S. crude production
  • Asian shares edged lower, Wall Street was boosted by earnings overnight
  • Banks boosted Saudi Arabia’s index on Wednesday
  • Dollar softens, gold steadies

Oil prices

Oil prices dropped in early trading on Thursday after the Energy Information Administration (EIA) said that American crude oil production reached a record 11.9 million barrel per day in the week ending January 11.

U.S. West Texas Intermediate (WTI) crude futures were at $52 per barrel at 0140 GMT, down 31 cents, or 0.6 percent, from their last settlement.

International Brent crude oil futures were down 34 cents, or 0.6 percent, at $60.98 per barrel.

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Along with the surge in U.S. crude output, exports from the United States are also rising, hitting a record 3.2 million bpd by the end of last year.

“Crude oil exports from the U.S. have strongly increased during the last few years and the trend is expected to remain positive,” shipping brokerage Banchero Costa said in a note, according to a Reuters report.

Global markets

Asian shares edged lower early on Thursday on worries over China’s economic outlook and uncertainties in the United Kingdom.

Lawmakers voted on Tuesday against British Prime Minister Theresa May’s proposed exit deal with the European Union by the large majority of 432 to 202.

May’s loss overnight triggered political upheaval that could lead to a disorderly exit from the European Union on March 29 or even to a reversal of the 2016 decision to leave.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent in thin trade.

Strong earnings boosted Wall Street overnight, the Dow Jones Industrial Average rose 141.57 points, or 0.59 percent, to 24,207.16, the S&P 500 gained 5.8 points, or 0.22 percent, to 2,616.1 and the Nasdaq Composite added 10.86 points, or 0.15 percent, to 7,034.69.

Middle East markets

Saudi Arabia’s index rose 0.7 percent on Wednesday boosted by banks. Banque Saudi Fransi rose 5.2 percent and Riyad Bank continued to rise, adding 4.5 percent.

In Dubai, the index gained 0.4 percent,as Emirates NBD, its largest bank, gained 1.1 percent after reporting a 10 percent rise in its fourth-quarter net profit.

The Abu Dhabi index was mainly flat with First Abu Dhabi Bank, United Arab Emirates' largest lender, slipping 0.4 percent.

Qatar's index also traded flat, with Middle East's biggest lender, Qatar National Bank, shedding 0.5 percent.

The Egyptian blue-chip index EGX30 added 0.5 percent, with its biggest lender Commercial International Bank rising 3.4 percent.

Kuwait’s premier market index edged 0.1 percent lower, Bahrain’s index was flat and Oman’s index dropped 0.5 percent.

Currencies

The dollar softened on Thursday.

The dollar index, which measures the greenback against a basket of major currencies, stood at 96.055 after gaining half apercent during the previous two sessions.

Precious metals

Gold prices steadied on a softer dollar.

Spot gold was steady at $1,293.36 per ounce, while U.S. gold futures were firm at $1,293 per ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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