|10 July, 2019

Wednesday outlook: Oil prices rally on drop in U.S. stockpiles

West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT

Natural gas fired turbine power plant with it's cooling towers rising into a cloud filled blue sky. Image used for illustrative purpose.

Natural gas fired turbine power plant with it's cooling towers rising into a cloud filled blue sky. Image used for illustrative purpose.

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  • Oil prices rise after API data
  • Asian shares advance, eyes on the Fed
  • Middle East markets edge higher
  • Dollar firms, gold prices drop

Oil prices

Oil prices surged more than 1 percent early on Wednesday after data showed a bigger-than-expected drop in United States stockpiles.

Data from industry group the American Petroleum Institute (API) showed on Tuesday that U.S. crude stockpiles fell for a fourth week in a row, while gasoline inventories decreased and distillate stocks built.

West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT. Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95.

“Global economic growth remains under pressure, with the latest manufacturing surveys weakening,” NAB said in a note, according to a Reuters report.

“This is likely to impact demand for commodities, although stimulus measures may in some cases support commodity demand,” NAB said, citing China as an example.

Global markets

Asian shares rose in early trading on Wednesday, gains were limited as investors cautiously awaited signs from the U.S. Federal Reserve on its policy later in the month.

“We still think the odds favor a 25 bps “insurance” cut,” Kevin Cummins, a senior U.S. economist at NatWest Markets, told Reuters.

“The Fed’s consideration of rate cuts is not only about growth but also about inflation, which remains well below target, and inflation expectations, which were breaking to the downside before the Fed signaled the likelihood of cuts.”

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4%, after three sessions of losses.

Overnight on Wall Street, the Dow ended Tuesday down 0.08%, while the S&P 500 added 0.12% and the Nasdaq 0.54%.

Middle East markets

Most markets in the region advanced on Tuesday.

The Saudi index added 0.3% with National Commercial Bank rising 1.3% and Riyad Bank 0.7% higher.

The Dubai index traded flat with Emaar Properties, its largest listed developer, adding 0.9%.

The Abu Dhabi index gained 0.2% with First Abu Dhabi Bank, the country's largest lender, closing 0.4% higher and Abu Dhabi Commercial Bank (ADCB) up 1.1%.

In Qatar, the index increased 0.6% with Qatar Gas Transport gaining 2.7%, while lender Masraf Al Rayan was up 0.8%.

Kuwait's index rose 1.4% with National Bank of Kuwait and Boubyan Bank increasing 0.7% and 1.2%, respectively.

Egypt’s blue-chip index added 0.4 percent, while Oman’s index traded flat and Bahrain’s index gained 0.4 percent.

Currencies

The dollar hovered near a three-week high early on Wednesday.

The dollar index .DXY, which measures the greenback against a basket of six major currencies, was at 97.518 after touching 97.588 on Tuesday.

Precious metals

Gold prices dropped on a stronger dollar.

Spot gold was down 0.4% at $1,391.98 per ounce at 0103 GMT.

U.S. gold futures slipped 0.4% to $1,394.40 an ounce.

Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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