|28 August, 2019

Wednesday Outlook: Oil prices rise on drop in U.S. crude stockpiles

Brent crude LCOc1 was up by 37 cents, or 0.6 percent, at $59.88 a barrel by 0220 GMT

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2019.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2019.

REUTERS/Brendan McDermid
  • Oil prices gain on API report
  • Asian shares firm
  • Middle East markets mostly gain
  • Dollar, gold prices steady

Oil prices

Oil prices gained early on Wednesday after data from industry group, the American Petroleum Institute (API), showed that United States crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million barrel draw.

Brent crude LCOc1 was up by 37 cents, or 0.6 percent, at $59.88 a barrel by 0220 GMT.

West Texas intermediate crude CLc1 was up 55 cents, or 1.0 percent, at $55.48 a barrel.

“The mammoth crude inventory draw has, at least for the time being, put to rest those U.S. recessionary doom and gloom fears that have been hanging over oil markets like a dark cloud,” Stephen Innes, managing partner at Valour Markets told Reuters.

Global markets

Asian shares were mainly unchanged early on Wednesday.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.06 percent, dragged lower by Chinese markets.

U.S. President Donald Trump on Monday said he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations, settling global markets.

“Bonds are rallying and there is limited upside for stocks right now,” Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo, told Reuters.

“But I don’t want to give up on equities just yet. The U.S. Federal Reserve and officials in other countries simply have to do more to stimulate their economies, which will eventually prevent the bottom from falling out.”

U.S. stock futures ESc1 were 0.27 percent higher, which helped ease investors' nerves in Asian trading after the S&P 500 fell 0.33 percent on Tuesday.

Middle East markets

Most stock markets in the region gained on Tuesday.

Saudi Arabia’s index edged up 0.3 percent as Samba Financial Group rose 3.6 percent and Saudi Basic Industries advanced 1.8 percent.

In Dubai, the index was up 0.8 percent with all its property shares trading higher and blue-chip developer Emaar Properties gaining 2.1 percent.

The Abu Dhabi index rose 2.7 percent as First Abu Dhabi Bank, the United Arab Emirates' largest lender, jumped 3.2 percent contributing the most to the index rise. Emirates Telecom gained 2.5 percent.

Qatar's index rose 2.5 percent as Qatar National Bank and blue-chip petrochemical maker Industries Qatar surged 3 percent and 3.4 percent respectively.

Egypt's blue-chip index traded roughly flat with Egyptian Resorts shedding 5.3 percent.

Kuwait’s premier market index was mainly flat, while Bahrain’s index gained 0.4 percent and Oman’s index rose 0.7 percent.

Currencies

The dollar was mainly unchanged early on Wednesday.

The dollar index .DXY, which measures the greenback against a basket of six major currencies, stood little changed at 98.013 after dipping 0.1 percent overnight. 

Precious metals

Gold prices firmed.

Spot gold was steady at $1,542.90 per ounce, as of 0100 GMT.

U.S. gold futures inched up 0.1% to $1,553.30 an ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2019

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