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|21 November, 2018

Wednesday outlook: Oil prices edge up after plunging 6 percent in the previous session

Oil prices partially recover some of the losses incurred on Tuesday. Asian shares track Wall Street lower on concerns over global economic growth. More commentary on Middle East markets, currencies and precious metals

Image used for illustrative purpose. 1XL Local Oil, The hunt is on in Manitoba for Oil. This Image was taken close to the Saskatchewan border in Manitoba, north west of the town of Virden.

Image used for illustrative purpose. 1XL Local Oil, The hunt is on in Manitoba for Oil. This Image was taken close to the Saskatchewan border in Manitoba, north west of the town of Virden.

Getty Images/ mysticenergy
  • Oil prices rebound after Tuesday’s sell-off
  • Asian shares track Wall Street lower
  • Most stock markets in the Middle East drop
  • Dollar steadies, gold retreats

Oil prices

Oil prices edged up in early trading on Wednesday after dropping 6 percent in the previous session.

The rebound came after the American Petroleum Institute announced in a report published late on Tuesday that the United States’ commercial crude inventories last week fell unexpectedly by 1.5 million barrels, to 439.2 million, in the week to November 16.

Investors remained cautious and the rebound only partially recovered some of the losses incurred on Tuesday, as oil prices fell sharply following a drop in global stock markets and weakening market sentiment.

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International Brent crude oil futures were at $63.35 per barrel at 0401 GMT, up 82 cents, or 1.3 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures, were up 78 cents, or 1.4 percent, at $54.21 a barrel.

“We would anticipate further weakness until the reaction from OPEC+ (Dec. 6) and the G20 summit is clearer (Nov. 30/Dec. 1),” Ashley Kelty, oil analyst at investment bank Cantor Fitzgerald Europe, told Reuters.

Global markets

Asian shares dropped early on Wednesday along with weakening global markets as concerns over global economic growth weighed on investor sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6 percent.

Overnight on Wall Street, The Nasdaq, S&P 500 and Dow closed lower.

“It is difficult to pinpoint a single factor driving the global risk aversion. Apple and trade tensions seem to be touted as factors every other day, but it is difficult to blame them for all the woes,” Soichiro Monji, senior economist at Daiwa SB Investments, told Reuters.

“The markets appear to be starting to prepare for a loss of momentum in the global economy, although it is doing quite well at the moment.”

Middle East markets

Stock markets in the Middle East mostly dropped on Tuesday as a retreat in global markets and oil prices kept investors on edge.

Dubai’s index fell 1.2 percent as DAMAC Properties lost 2.8 percent, Emaar Development was down 2.6 percent and Emirates NBD lost 2.1 percent.

Abu Dhabi’s index fell 1.8 percent, with First Abu Dhabi Bank dropping 2.2 percent and Commercial Bank International tumbling 8.6 percent.

Saudi Arabia’s index dropped 0.7 percent as Saudi Basic Industries lost 2.0 percent and National Commercial Bank decreased 1.3 percent.

Qatar’s index fell 1.3 percent, dragged lower by a 3.4 percent drop in Qatar National Bank’s shares.

Kuwait’s index fell 0.3 percent, while markets in Egypt, Oman and Bahrain were closed for religious holidays.

Currencies

The dollar steadied on Wednesday as investors moved away from equities.

The dollar index, which measures the greenback against a basket of six major currencies, steadied, after gaining 0.65 percent on Tuesday.

Precious metals

Gold prices edged lower on a stronger dollar.

Spot gold dipped 0.1 percent to $1,219.96 per ounce at 0122 GMT.

U.S. gold futures were down 0.1 percent at $1,220.3 per ounce.

(Reporting by Gerard Aoun; Editing by Shane McGinley)

(gerard.aoun@refinitiv.com)


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