|18 September, 2019

Wednesday outlook: Oil prices step back as Saudi Arabia calms supply fears

Brent crude futures dipped 0.1 percent to $64.50 a barrel, having conceded more than 60 percent of their gains made after the weekend attack on Saudi oil facilities

Image used for illustrative purpose. The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019.

Image used for illustrative purpose. The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019.

REUTERS/Christian Hartmann
  • Oil prices concede 60 percent of gains
  • US stocks unchanged, investors focus on Fed
  • ADX’s index edges 0.2 percent higher, region drops
  • Dollar and gold prices remain unchanged

Oil prices

Oil prices dropped early on Wednesday after Saudi Energy Minister Prince Abdulaziz bin Salman sought to reassure markets, saying the kingdom would restore its lost oil production by month-end having recovered supplies to customers to the levels they were prior to weekend attacks.

Brent crude futures dipped 0.1 percent to $64.50 a barrel, having conceded more than 60 percent of their gains made after the weekend attack on Saudi oil facilities.

U.S. West Texas Intermediate (WTI) crude lost 0.5 percent to $59.06 per barrel, compared to four-month peak of $68.38 marked on Monday.

“I would think a spike in oil prices will likely prove to be short-term given that the global economy isn’t doing too well,” Akira Takei, bond fund manager at Asset Management One told Reuters.

Global markets

Stock markets in the United States were mainly unchanged on Tuesday as investors were cautious ahead of a Federal Reserve two-day policy meeting.

By 2:30 pm Eastern Time, the Dow Jones Industrial Average was down 0.06% at 27,060.17 points, while the S&P 500 gained 0.01% to 2,998.34. The Nasdaq Composite added 0.09% to 8,160.91.

Investors will wait for clues on how far the U.S. monetary policy easing would go, given that Fed policymakers are deeply divided on whether more rate cuts are warranted.

“Its going to be difficult for them to signal an extremely dovish tone, given they are already half divided at this point,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in Charlotte, North Carolina told Reuters.

Middle East markets

Saudi Arabia’s index dropped 0.7 percent on Tuesday with the Gulf's largest petrochemical firm Saudi Basic Industries (SABIC) dropping 3.2 percent as the firm traded ex-dividend.

Dubai’s index lost 1 percent, led by blue-chip developer Emaar Properties which was down 3 percent, while Dubai Islamic Bank closed 0.9 percent lower.

In Abu Dhabi, the index edged up 0.2%, with the United Arab Emirates' largest lender First Abu Dhabi Bank gaining 1 percent.

Qatar’s index fell 0.4 percent on a 1.4 percent drop in Qatar Islamic Bank and a 2.7 percent drop in Qatar Insurance Company.

Egypt’s blue-chip index EGX30 fell 1.5 percent while Kuwait’s premier market index dropped 0.5 percent, Oman’s index slipped 0.2 percent and Bahrain’s index dropped 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, fell 0.02 percent to 98.242.

Precious metals

Gold prices were also unchanged on Wednesday.

Spot gold was steady at $1,501.91 per ounce, as of 0100 GMT.

U.S. gold futures were down 0.3 percent at $1,508.8 per ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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© ZAWYA 2019

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