|12 April, 2018

Oil prices add gains on geopolitical tensions

United States crude inventories rose by 1.8mln barrels

Image used for illustrative purpose.

Image used for illustrative purpose.

Illustration by Mohamad Chehab

Oil markets added gains early on Thursday as geopolitical tensions in the Middle East and concerns that the United States could renew sanctions against Iran outweighed a report by the American Petroleum Institute (API) on Tuesday showing that United States crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million.

Brent crude futures were at $72.25 per barrel at 0250 GMT, up 19 cents, or 0.3 percent from their last close.

U.S. WTI crude futures were at $67.010 a barrel, up 28 cents, or 0.4 percent from their last settlement.

In stocks, Asian shares traded lower on Thursday, tracking a drop in U.S. shares overnight on escalating tensions in the Middle East.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.05 percent in early trade.

On Wednesday, the S&P 500 lost 0.55 percent and the Nasdaq Composite dropped 0.36 percent on Wall Street.

In the Middle East, stock markets were mixed on Wednesday.

Egypt’s blue-chip index gained 1.4 percent as real estate shares boosted the index. SODIC and Madinet Nasr for Housing and Development said they would start preliminary talks on strategic cooperation that might involve a merger or acquisition, EFG Hermes will advise Madinet Nasr.

SODIC jumped 5.5 percent to a 10-year closing high and Madinet Nasr added 7.4 percent to a record high.

Palm Hills Development gained 3.6 percent and Heliopolis Co for Housing and Development rose 3.0 percent.

Dubai's index closed 1.4 percent higher as Emaar Properties added 4.8 percent. Neighbouring Abu Dhabi’s index lost 0.5 percent as First Abu Dhabi Bank lost 1.6 percent.

Saudi Arabia’s index lost 1.9 percent, its biggest drop since October. The index mostly dropped in the final hour of trading.

Al Rajhi Bank lost 1.3 percent and Savola Group, Saudi Arabia's largest food products company, tumbled 6.0 percent.

Qatar’s index edged up 0.1 percent, Kuwait’s index gained 0.5 percent, Bahrain’s index edged up 0.1 percent and Oman’s index edged up 0.1 percent.

In currencies, the dollar dropped against the yen on Thursday as investors sought shelter in the safe haven Japanese currency on geopolitical concerns.

The dollar last traded at 106.810 yen after losing 0.4 percent overnight.

The dollar index against a basket of six major currencies was down 0.1 percent after dipping overnight to a two-week trough.

Gold prices, seen as a safe haven, rose on Wednesday to $1,365.23 per ounce. But early on Thursday, spot gold was down 0.1 percent at $1,351.48 an ounce as of 0111 GMT as minutes from the Federal Reserves's last policy meeting raised expectations for a faster pace of U.S. rate hikes.

In other news, Egypt’s Supply Minister Ali Meselhy told reporters on Wednesday that Egypt aims to import 6 million tonnes of wheat in the 2018/19 fiscal year that begins in July to fill the gap between production and consumption.

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© ZAWYA 2018

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