Oil prices up as global markets recover post-Brexit

SINGAPORE, Singapore—Oil prices rose in Asia on Friday as traders welcomed assurances from central bank around the world that they were ready to step in to prevent a global rout following Britain’s vote to leave the European Union.

After the initial shock of last Thursday’s referendum sparked a freefall, this week has seen a broad recovery across all asset classes.

South Korea has promised of $17 billion in stimulus and speculation swirls that Japan is planning to further loosen monetary policy while the chances of the US raising interest rates have all but evaporated.

On Thursday Bank of England boss Mark Carney hinted that policymakers were contemplating a cut in interest rates.

The news sent European and US shares soaring, and Asian traders picked up the baton Friday to press more gains.

The optimism filtered through to the oil market and at about 0315 GMT, US benchmark West Texas Intermediate for August delivery was up 34 cents, or 0.70 percent, at $48.67.

Brent for September, a new contract, was up 39 cents, or 0.78 percent, at $50.10.

“Investors seemed to be finding reasons to be optimistic about the post-Brexit rebound,” said IG Markets analyst Bernard Aw.

CMC Markets analyst Margaret Yang said equity markets were on the rise partly because “the Bank of England hinted that more monetary stimulus is on the roadmap to battle the post-Brexit economic fallout.”

Oil market watchers said last week’s decline in US commercial inventories is also helping boost prices, but a sustained price rise will only come if producers make meaningful cuts in output.

The drop in US crude stockpiles “is certainly supportive” of prices, David Lennox, a resource analyst at Fat Prophets in Sydney, told Bloomberg News.

“But the market is waiting for real production cuts, and until that happens any strong rally in the oil price is just not going to be sustainable,” he said.

source: business.inquirer.net

Global shares mixed after Wall Street slump, oil price rally

KUALA LUMPUR, Malaysia — European stocks were mostly higher Thursday while Asian shares were mixed after a weak session on Wall Street. Tokyo shares rebounded after a weak start as the yen weakened against the U.S. dollar.

KEEPING SCORE: France’s CAC 40 rose 0.2 percent at 4,325.09 and Germany’s DAX gained 0.1 percent to 9,986.52. Britain’s FTSE 100 was nearly flat at 6,158.38. Dow and S&P 500 futures rose 0.4, suggesting a positive start for Thursday trading.

BRITISH FACTOR: A raft of data is due out later Thursday

and traders are watching for further clues on monetary policy from a speech by Bank of England Governor Mark Carney, especially in light of Britain’s referendum on continued EU membership due next month.

TOYOTA PROFIT: Shares in Toyota Motor Corp. fell 1.4 percent after a 6.1 percent drop overnight in New York. On Wednesday, the company projected a 35 percent plunge in profit for the fiscal year through March 2017 as the perks of a favorable exchange rate fade, and it reported a 4 percent drop in profit for January-March on-year. Other exporters can expect similar woes thanks to the yen’s recent gains against the U.S. dollar.

OIL PRICES: Already trading at its highest price in six months, benchmark U.S. crude rose overnight after the government reported a surprise decline of 3.4 million barrels in supplies for last week and a 6 percent reduction in U.S. oil output. U.S. oil gained 1 cent to $46.24 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $1.57, or 3.5 percent, to $46.23 a barrel on Wednesday. Brent crude, the international benchmark, gained 5 cents to $47.65 a barrel. It had jumped $2.08, or 4.6 percent, to $47.60 a barrel in London.

ANALYST VIEWPOINT: “Commodity stocks are among the few positive movers today, following a major oil rally on the back of U.S. evidence consumption is eating into the historically high stock piles of crude,” Michael McCarthy of CMC Markets said in a commentary. “This better demand picture combined with a slightly weaker USD makes energy and materials the sectors du jour.”

ASIA’s DAY: Japan’s Nikkei 225 stock index rose 0.4 percent to 16,646.34, while the Hang Seng index of Hong Kong dropped 0.7 percent to 19,915.46. South Korea’s Kospi lost 0.1 percent to 1,977.49 and Australia’s S&P/ASX 200 fell 0.2 percent to 5,359.30. Taiwan fell but most benchmarks in Southeast Asia rose.

CURRENCIES: The dollar rose to 108.99 yen from 108.40 in the previous session. The euro slipped to $1.1413 from $1.1424. The yen-dollar rate has “slipped back down to 108 levels, as a short-squeeze in the early week abated with no more official talk of intervention yesterday, while markets are also doubting if Japan would intervene in advance of the G7 summit,” Mizuho Bank Ltd. (Singapore branch) said in a commentary. TVJ

source: business.inquirer.net