Advertisement
|03 April, 2019

Wednesday outlook: Oil prices near $70 on tightening supplies

Data on production cuts and on the Chinese and U.S. economies boosted oil prices to hover near $70 a barrel

Image used for illustrative purpose. BP's Huge oil refinery complex continues it's 24 hour production of petroleum and gas

Image used for illustrative purpose. BP's Huge oil refinery complex continues it's 24 hour production of petroleum and gas

Getty Images
  • Brent rises to $69.72
  • Asian shares rise again on improved sentiment
  • Most Middle East markets make gains
  • Dollar drops, gold steadies

Oil prices

Oil prices approached $70 a barrel on Wednesday, rising for a fourth straight session on tightening supplies.

The Organization of the Petroleum Exporting countries (OPEC) issued a list of oil production cuts made by its members and other major producers since the start of the year. It also detailed scheduled cuts until the end of June in a bid to boost confidence in its oil supply reduction pact.

Advertisement

Supply from OPEC countries hit a four-year low in March, a Reuters survey found earlier this week.

Oil prices have also been boosted by lower supply from Venezuela, as the United States introduced petroleum export sanctions against state-owned Venezuelan energy firm PDVSA.

Positive data from the world’s biggest economies, the U.S. and China, supported prices with China’s manufacturing sector unexpectedly returning to growth for the first time in four months during March, figures showed on Monday.

U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories were drawn down, according to the American Petroleum Institute.

Early on Wednesday, Brent futures rose 35 cents, or 0.5 percent, to $69.72 a barrel by 0207 GMT, after earlier reaching $69.87, the highest since November 12 and within touching distance of $70.

U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since November 7.

Global markets

Asian shares gained in value on Wednesday, rising to seven-month highs, as sentiment improved on easing trade tensions.

According to a Reuters report published earlier in the week, U.S. officials held “constructive” talks in Beijing, Treasury Secretary Steven Mnuchin said, concluding the latest round of dialogue with China aimed at resolving the trade dispute between the world’s two largest economies.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 percent at around 0310 GMT, after earlier touching its highest level since late August.

On Tuesday, the Dow Jones Industrial Average fell 0.3 percent to 26,179.13 points, the S&P 500 was flat and the Nasdaq Composite gained 0.25 percent to 7,848.69.

“I think there’s a tendency for markets at times to just want to be positive unless you hit them repeatedly, and not just with bad news, but with new bad news,” Rob Carnell, chief economist and head of Asia-Pacific research at ING in Singapore, told Reuters.

“There’s been an awful lot of bad news priced in. So perhaps the absence of new negatives are enough to allow for a small sense of positivity to creep in,” he said.

Middle East markets

Stocks in the region rose on Tuesday with Dubai’s index rising for a fourth straight session.

The Dubai index closed 1.2 percent higher with Emaar Properties gaining 3.2 percent, while its largest lender Emirates NBD was up 2.4 percent.

Abu Dhabi's index traded flat, despite energy firm Dana Gas rising 2.1 percent.

The Saudi index was up 0.4 percent, with Saudi Basic Industries gaining 0.8 percent and National Industrialization Co climbing 4.8 percent.

In Qatar, the index added 0.5 percent, led by a 4.8 percent rise in Qatar Insurance, its biggest intraday gain in five months.

Egypt’s blue-chip index gained 1.4 percent, Kuwait’s premier market index rose 1 percent while Bahrain’s index edged 0.2 percent higher and Oman’s index dropped 0.5 percent.

Currencies

The dollar eased early on Wednesday.

The dollar index, which measures the greenback against a basket of six major currencies, edged 0.16 percent lower to 97.206.

Precious metals

Gold prices firmed as the dollar dropped.

Spot gold was flat at $1,292.48 per ounce as of 0354 GMT, while U.S. gold futures firmed 0.1 percent at $1,296.90 an ounce.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)


Gain a deeper understanding of financial markets through Thomson Reuters Eikon

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

More From Commodities