SINGAPORE - Oil prices edged up on Wednesday on expectations of tighter markets once US sanctions target Iran’s petroleum industry from next month, although a strong dollar and rising US crude supply curbed gains.
Brent crude oil futures were at $84.89 per barrel at 0646 GMT, up 9 cents from their last close.
US West Texas Intermediate (WTI) crude futures were up 7 cents at $75.30 a barrel.
Traders said global oil markets remained tense because of the looming US sanctions against Iran’s oil exports, which kick in from Nov. 4.
Brent and WTI earlier this week both reached levels last seen in November 2014, and the two contracts have risen by around 20 and 17 percent respectively since mid-August.
Despite this, traders said prices were held back by a strong dollar which makes oil imports more expensive for countries using other currencies domestically, as well as by climbing supply in the United States.
US commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Refinery crude runs fell by 158,000 barrels per day (bpd), API data showed.
Official weekly government data is due from the Energy Information Administration (EIA) on Wednesday.
Traders said the rising stocks were partly due to a relentless increase in US crude oil production, which has jumped by a third since mid-2016 to a record 11.1 million bpd.
“We expect U.S. crude production to exit the year at 11.3 million bpd,” Barclays bank said in a note on Tuesday.
That would mean the United States challenges Russia as the world’s biggest crude oil producer.
On the demand side, fuel consumption is strong, growing especially fast in Asia’s emerging economies.
However, high crude prices, combined with widespread emerging market currency weakness, threaten growth.
“That oil prices are rising to elevated levels at the same time as emerging market currencies hit record lows will be a flashing signal to OPEC members that demand may be at risk of a sharp correction,” said Emirates NBD bank.
source: news.abs-cbn.com
NEW YORK - Treasury prices plunged on Wednesday after a spike in US consumer prices in January raised expectations the Federal Reserve may quicken the pace of interest rate hikes, while global stocks rallied as investors took inflation in stride.
The US dollar fell against a basket of major world currencies after the Labor Department said its highly anticipated Consumer Price Index increased 0.5 percent. Gold rebounded from losses as stocks swung higher.
The report increased the likelihood that the Fed will raise rates when policy-makers meet March 20-21 - even as US retail sales posted their largest decline in 11 months.
The odds of a March rate hike rose 7 percentage points to 83.1 percent, according to the CME Group's FedWatch tool.
Shares in Europe gained more than 1 percent as did a gauge of global equity activity. Stocks on Wall Street opened lower but steadily climbed through the session after the initial shock of the big jump in monthly inflation was digested.
Joseph LaVorgna, chief economist for the Americas at French bank Natixis in New York, said inflation had to be put in context. The year-over-year rate on core inflation at 1.8 percent was still below the Fed's target of 2 percent, he said.
Excluding the volatile food and energy components, the CPI shot up 0.3 percent in January.
Monthly data tend to be noisy, said Phil Orlando, chief equity strategist at Federated Investors in New York.
"The market is doing exactly what the market does, it shoots first and asks questions later," Orlando said, adding investors are likely to remain jittery until the first Fed policy-setting meeting in March under new Chair Jerome Powell.
"There ought to be some chop to it as we're trying to figure out what's going on in the economy and how might the Fed adjust monetary policy under a new leadership team given the backdrop of macroeconomic data," Orlando said.
MSCI's all-country world index of stocks in 47 countries gained 1.42 percent while the pan-European FTSEurofirst 300 index of leading regional shares rose 1.03 percent to close at 1,469.00.
Paul Eitelman, an investment strategist at Russell Investments, said it was unlikely the Fed would increase its forecasted rate hikes as such a move would be a bit bold for a new Fed chief and likely be an over-reaction to one data point.
Shares in Europe rose after initial declines as solid corporate results and economic data kept investors confident.
Data earlier in the day showed Germany's economy was set to power ahead in 2018, while a Thomson Reuters study said fourth-quarter European earnings growth expectations were revised upwards after 15 weeks of downgrades.
The Dow Jones Industrial Average rose 253.38 points, or 1.03 percent, to 24,893.83. The S&P 500 gained 35.75 points, or 1.34 percent, to 2,698.69 and the Nasdaq Composite added 130.11 points, or 1.86 percent, to 7,143.62.
German government bond yields hit their highest in more than two years. The yield on Germany's 10-year government bond , the benchmark for the region, reversed earlier declines and rose around 3 basis points to 0.774 percent - its highest level since September 2015, according to Tradeweb data.
Yields on the benchmark 10-year US Treasury note hit a fresh four-year high. The notes last fell 20/32 in price to yield 2.9131 percent.
The dollar index fell 0.8 percent, with the euro up 0.87 percent at $1.2457. The Japanese yen strengthened 0.77 percent versus the greenback to 107.01 per dollar.
Oil prices rebounded from earlier losses after US crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major producers would prefer tighter markets than to end supply cuts too early.
US crude inventories rose 1.8 million barrels last week, Energy Information Administration (EIA) data showed compared with expectations for an increase of 2.8 million barrels.
US crude rose $1.41 to settle at $60.60 per barrel and Brent settled up $1.64 at $64.36 per barrel.
US gold futures for April delivery settled up $27.60 per ounce at $1,358.
source: news.abs-cbn.com
