Bonds plunge, stocks surge on spike in US inflation data

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

Asian stocks climb as oil crawls up from 10-month low

SINGAPORE - Asian stocks advanced on Thursday as oil prices inched up after hitting a 10-month low overnight on concerns over a supply glut and falling demand, dragging US and European shares lower.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 percent.

Japan's Nikkei and South Korea's KOSPI were flat, while Australian shares rose 0.4 percent.

The Philippine Stock Exchange Index opened little changed at 7,882.54.

Crude oil crept up from multi-month lows hit on Wednesday on concerns over growing US production and reduced Chinese refinery activity.

"The time for contrarian trades in oil is fast approaching, but I would want to see some stability in price and the technicals start to become more convincing," said Chris Weston, chief market strategist at IG in Melbourne.

US crude futures rose 0.3 percent or 13 cents to $42.66 a barrel. They closed down 1.6 percent on Wednesday after touching their lowest level since August.

Global benchmark Brent climbed 0.2 percent or one cent to $44.92. It closed down 2.6 percent on Wednesday after touching a seven-month low.

The resulting decline in oil stocks hit stocks in Europe and on Wall Street overnight.

Britain's FTSE, Germany's DAX and France's CAC 40 closed between 0.3 percent and 0.4 percent lower.

The Dow Jones Industrial Average closed down 0.3 percent, while the S&P 500 was slightly lower. Nasdaq closed up 0.7 percent, lifted by biotech stocks.

Financial stocks also contributed to losses on Wall Street, driven lower by a drop in the Treasury yield curve to its flattest in almost a decade, as investors tried to reconcile a hawkish Federal Reserve with deteriorating inflation measures.

Boston Fed President Eric Rosengren and Fed Vice Chair Stanley Fischer suggested they are concerned less about raising rates too fast or too high than about keeping them too low for too long.

“I think the market may be pricing in a little higher odds of another rate hike before the end of the year, and that is helping drive some of the flattening,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

The yield curve between five-year notes and 30-year bonds flattened to as low as 95.20 basis points, the narrowest since December 2007, on Wednesday and again early on Thursday.

The dollar was marginally lower on Thursday. The dollar index was at 97.523, following Wednesday's 0.2 percent loss.

The greenback bought 111.41 yen.

Sterling retained Wednesday's 0.3 percent gain to trade at $1.268 early on Thursday after the Bank of England's chief economist said he was likely to vote for an interest rate hike this year. Until now, he has been seen as largely supportive of keeping rates low.

The euro was flat at $1.117, holding on to Wednesday's 0.3 percent gain.

Spot gold rose 0.3 percent to $1,250.06 an ounce.

(Reporting by Nichola Saminather; additional reporting by Karen Brettell; Editing by Kim Coghill)

source: news.abs-cbn.com

Dollar profits from yield allure, Nikkei at 1-year peak

SYDNEY - The US dollar was encamped near 14-year peaks on Wednesday as global yield spreads moved inexorably in its favor, while a falling yen lifted Japanese shares to a one-year top.

Japan's Nikkei added 0.4 percent in early trade, while Australia's main index climbed to its highest in almost 17 months after Wall Street racked up more records.

The dollar revelled in its rapidly widening yield premium, with the Federal Reserve set on a tightening course even as its peers in Europe and Japan act to keep their short-term rates deep in negative territory.

The dollar index, which measures it against a basket of currencies, stood at 103.260 having touched 103.65, its highest since December 2002.

The dollar had also edged back up to 117.80 yen, within sight of its recent peak at 118.66, while the euro stayed pinned at $1.0394.

On Wall Street, the Dow ended just 25 points shy of the magical 20,000 barrier helped by a 1.68 percent gain in Goldman Sachs.

Stocks have been on a tear since the Nov. 8 presidential election, with the Dow up 9 percent and the S&P 500 6 percent on bets that President-elect Donald Trump's plans for deregulation and infrastructure spending might boost profits and growth.

The Dow rose 0.46 percent on Tuesday, while the S&P 500 gained 0.36 percent and the Nasdaq 0.49 percent. Eight of the 11 major S&P sectors rose, led by a 1.23 percent jump in the financial index.

After the bell, Nike rose 3 percent on a strong quarterly report from the sports apparel seller.

NOT THRILLED

European shares scaled 11-month highs on Tuesday as Italy's banking index rose 2.3 percent after the government decided to seek parliamentary approval to borrow 20 billion euros to underwrite the stability of its banks.

Emerging markets have not been nearly as thrilled by Trump's win, as the threat of tariffs has stirred fears of a trade war while rising US yields have attracted funds away.

Benchmark 10-year US yields have climbed almost 80 basis points since early November to reach 2.56 percent.

Data from the Institute for International Finance showed non-resident investors had pulled $23 billion from emerging market portfolios since early October.

The outflows have triggered the longest continuous "reversal alert" since the organization began issuing the notice in 2005.

Chinese markets have also been unsettled by Beijing's move to tighten supervision of shadow banking activities and on liquidity concerns.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent in early trade, but that followed several days of losses.

In commodity markets, oil prices nudged higher for a fourth session to defy news Libya had reopened pipelines after a two-year blockade that ended earlier this month.

US crude futures were up 24 cents at $52.54 a barrel. Benchmark Brent crude futures had settled 43 cents firmer at $55.35.

Gold held at $1,132.90 an ounce as a firm US dollar kept it pinned near last week's 10-1/2-month low of $1,122.35.

source: news.abs-cbn.com

Asian stocks rise on back of Wall Street; gold slips

HONG KONG - Asian stocks opened higher on the back of a strong Wall Street with markets discounting the potential impact of Italy's referendum vote, while US Treasury yields firmed as robust economic data pointed to an interest rate hike next week.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent in early trade with Antiopodean markets leading gains. Korea climbed 1 percent in opening trades.

Wall Street rose on Monday, with the Dow Jones industrials setting fresh record highs following services sector data that showed further strength in the domestic economy.

US services sector activity hit a one-year high in November, with a surge in production boosting hiring, following on the heels of Friday's employment report that showed strong job gains last month.

The data pushed short-dated Treasury yields higher with two-year benchmark yields stabilizing near the 1.13 percent level, not far from a six-year high of 1.17 percent tested in late November as markets have baked in the probability of a rate increase by the US Federal Reserve next week.

Interest rates futures implied traders saw a 93 percent chance the Fed would raise rates by a quarter point to 0.50-0.75 percent next week, CME Group's FedWatch showed.

Oil fell with US crude down more than 1 percent at $51.26 per barrel as investors judged a 16 percent rally since the Organization of the Petroleum Exporting Countries' agreement last Wednesday to curb production was getting stale.

Still, higher stocks and firmer short-dated Treasury yields projected a more optimistic backdrop for risk appetite than Monday when Asian markets plunged as investors worried the euro-zone may be heading for a fresh crisis after the Italian vote.

That lift in sentiment pushed the prices of relative safe-haven assets such as gold and Japanese yen lower.

Spot gold fell by as much as 1.6 percent to its lowest since early February at $1,157 an ounce, before bouncing somewhat.

source: news.abs-cbn.com

Oil, dollar and bond yields sharply higher after OPEC deal

TOKYO - Crude prices, the dollar and bond yields were sharply elevated early on Thursday after OPEC agreed to a deal to reduce output to clear a supply glut that has crunched oil prices and stoked global deflationary pressures.

The Organization of the Petroleum Exporting Countries on Wednesday agreed to its first output cut since 2008, with Saudi Arabia accepting "a big hit" on its production. Non-OPEC Russia will also join output reductions for the first time in 15 years to help OPEC prop up oil prices.

US crude oil soared more than 9 percent overnight to a one-month high just shy of $50.00 a barrel. The contracts were a fraction lower at $49.22 a barrel early on Thursday. Brent crude were just above $51.00 a barrel after rallying to a six-week peak of $52.37.

The jump in oil prices added to inflation expectations in the United States, which were already high on prospects that president-elect Donald Trump would enact reflationary policies funded by large fiscal stimulus.

As a result US Treasuries resumed their rout, with prices sliding and yields spiking, to send the dollar rallying against its peers. The yield on 30-year bonds, which are most sensitive to inflation eroding their value, climbed about 9 basis points to 2.39 percent overnight, taking it back towards 14-month peaks marked last week.

"The reflation trade continues to work in earnest, this time Trump has taken a back seat and OPEC and Russia have taken the initiative and lit the fuse under the oil price," wrote Chris Weston, chief market strategist at IG in Melbourne.

"The consensus was that we would get some sort of loose agreement from the collective that kept oil supported, but left the market asking many more questions. What we have seen however has been real meat on the bone."

The dollar touched a 9-1/2-month high of 114.830 yen, adding to gains made overnight when it surged 1.8 percent. The euro was steady at $1.0596 after shedding 0.6 percent the previous day.

The dollar index was firm at 101.51 after rallying overnight from a low of 100.84.

The Australian dollar, sensitive to changes in commodity prices and risk sentiment, was up 0.2 percent at $0.7396 after losing more than 1 percent the previous day.

In Asian equities, Australian stocks were up 0.7 percent and Japan's Nikkei gained more than 1 percent on a weaker yen to hit an 11-month peak

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 percent.

The region's stocks failed to draw much incentive from Wall Street, where shares ended mostly lower on Wednesday as drops in utilities and technology offset energy's surge.

Spot gold was firm at $1,172.46 an ounce after sliding 1.3 percent overnight to a 10-month low of $1,170.35 on the dollar's oil-induced surge.

source: news.abs-cbn.com

Asia stocks hit four-year trough as oil spirals lower

SYDNEY - Asian share markets were in full retreat on Wednesday as a relentless slide in oil prices soured an attempted rally on Wall Street and dealt a further blow to global investors' appetite for riskier assets.

U.S. crude wallowed at its lowest since 2003 after the world's energy watchdog warned the market could "drown in oversupply". U.S. crude futures shed 53 cents to $27.93, while Brent crude lost 24 cents to $28.52 a barrel.

Equity markets reacted by surrendering all of Tuesday's rare gains. MSCI's broadest index of Asia-Pacific shares outside Japan sank 2.1 percent to reach depths not seen since late 2011.

Japan's Nikkei fell 2.2 percent, leaving it 20 percent below last year's peak and so meeting the technical definition of a bear market.

The pain was felt widely with Australian stocks down 0.8 percent and South Korea off 2 percent.

Chinese markets fared only a little better amid mounting talk that more stimulus may be on the way, possibly before the Lunar New Year holidays in early February.

December factory output, investment and retail sales data released on Tuesday were all weaker than expected.

The CSI300 index fell 1 percent, having rallied over 3 percent on Tuesday. The Shanghai Composite Index eased 0.8 percent.

The government-backed China Securities Journal reported that Beijing had the policy space for further easing to support the economy, including raising deficit spending to around 3 percent of annual economic output.

China's central bank late Tuesday did reveal it would inject more than 600 billion yuan ($91.22 billion) into the banking system to help ease a liquidity squeeze expected before the long Lunar New Year celebrations.

Yet such a move is usual before the holidays and stopped well short of an actual cut in bank reserve ratios.

Wall Street had seen its early gains erased by the slump in U.S. crude. The Dow ended Tuesday up 0.17 percent, while the S&P 500 rose a single point and the Nasdaq eased 0.26 percent.

The S&P energy sector alone dived 2.17 percent. Oil at 12-year lows stokes fears of deeper losses for energy companies and the risk some may fail to pay their debts.

Tom Porcelli, chief U.S. economist at RBC Capital Markets, noted that polls of investors showed investors were more bearish on Wall Street than at any time since mid-1987.

"Perhaps characterizing the recent bout of negativity as being 'pervasive' is an understatement," he wrote in a note.


Yet history showed that sentiment was darkest before the dawn.

"When investor pessimism reached these levels outside of an economic recession, the market was higher one quarter hence in every single instance, and up by an average of 6.4 percent."

With risk out of favor, sovereign bonds were in demand. Yields on U.S. 10-year Treasuries declined to 2.03 percent and were down a massive 24 basis points since the new year began.

Other safe havens included the Japanese yen, which rose across the board. The dollar was dragged back to 117.14 yen from a top of 118.11 on Tuesday, while sterling hit its lowest since early 2014.

The pound had already been under fire after Bank of England Governor Mark Carney said he had no "set timetable" for raising rates, sending it to a seven-year low of $1.4127.

Against a basket of currencies, the U.S. dollar was down just a touch at 98.919, while the euro edged up to $1.0938.

source: www.abs-cbnnews.com

Oil's slide below USD30 sends shockwaves far and wide

NEW YORK - U.S. oil stumbled below $30 for the first time in 12 years to levels that threaten the survival of many U.S. shale firms, spur more belt-tightening by oil majors and spell more pain for crude-producing nations and regions.

A seven-day losing streak fueled by concerns about a continued supply glut and fragile demand from China, the world's No. 2 consumer, wiped out almost a fifth of crude prices CLc1 this year and 70 percent since mid-2014.

Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10.

And more of the world's biggest energy companies are conceding that it may be many years before prices recover. On Tuesday, U.S. crude futures traded below $50 through 2021.

British oil and gas giant BP Plc said on Tuesday it would slash 5 percent of its workforce in the face of the continued slump while Brazil's state oil firm Petrobras cut its investment plan for the third time in six months.

Royal Dutch Shell Plc and Exxon Mobil Corp., meanwhile, have seen their stock decline by 11 and 4 percent respectively.

The latest cuts add to the hundreds of thousands of job lost and billions of dollars spending cuts throughout crude's 18-month slide from levels above $100 a barrel in the summer of 2014, a collapse that has run far longer and deeper than originally expected, reaching crisis point for some.

For Russia, which relies on energy for about half its budget revenues and 40 percent of exports, $30-a-barrel oil could wipe out in just over a year the nation's rainy day funds amassed during bull energy markets and blow a hole in its budget.

Even Saudi Arabia, whose policy of maintaining output to defend its market share even as prices slide has been blamed, together with the resilience of U.S. shale producers, for the persistence of the global supply glut, is feeling the squeeze.

In its 2016 budget unveiled late last month, Riyadh announced a series of spending cuts and reduction in subsidies as oil revenues shrink.

But with major U.S. energy lender Wells Fargo estimating that sustained prices below $40 per barrel, let alone $30, are too low for U.S. shale producers to survive in the longer run, the stakes are exceptionally high for the young industry that turned the United States into a leading oil and gas producer.

The rout has already pushed dozens of small firms into bankruptcy or turned them into "zombies" firms that barely manage to pay their bills and service debts, but do not earn enough to ensure sustained production and revenues ahead.

Stocks of U.S. energy companies lost more than 9 percent in the past nine trading days and the sector is expected to report a 70 percent annual drop in earnings per share for the fourth quarter, according to Thomson Reuters data.

There are few signs suggesting any near-term relief. The U.S. Energy Information Administration predicted on Tuesday that already heavily swollen global oil stockpiles would continue rising until the second half of next year.

NO BOTTOM

The prospect of a protracted slump has fueled expectations of a flurry of asset sales deals that could be possibly financed by private equity or hedge fund investors and law firms and banks have been beefing up their restructuring teams.

The latest slide, however, quashed hopes that the market may have already found its bottom and private equity investors are expected to hold off with buying any assets with action expected to shift to bankruptcy courts.

The U.S. West Texas Intermediate crude (WTI) CLc1 benchmark briefly touched a low of $29.93, which was last seen in December 2003.

“With WTI now trading below $30, people are getting their minds wrapped around the lower-for-longer price scenario and … management teams and sponsors are starting to become resigned to the likelihood of an in-court solution,” said Matthew Hart, who leads the restructuring practice at Intrepid Partners.

The latest plunge has also deepened the gap between U.S. states such as Alaska, Oklahoma, North Dakota, Louisiana and New Mexico, which depend on production taxes to fund education and health care and the rest of the country, which has benefited from low gasoline prices.

SAVINGS AND SUVS

There are winners of the oil rout too.

Cheap gasoline and low heating costs have produced a windfall for the majority of U.S. consumers, which with a delay begins to show up in discretionary spending and savings.

The U.S. auto industry is also racking up record sales and profits, largely due to the resurgent popularity of trucks and sport utility vehicles fueled by gasoline prices at multiyear lows.

And some investors are still looking at the latest slide as a potential opportunity.

“It’s a wild cycle, but it’s so hard to predict where the bottom is,” said Gary Bradshaw, portfolio manager at the $1.9 billion Hodges Small Cap Fund. He says his firm has been buying small-cap natural gas firms in anticipation that the stocks will rebound soon, particularly if global events cause a quick tightening in oil supply.

“I think we’ll have a heck of a snap-back rally and crude will eventually, my guess, rebound to around $55 a barrel," he said. "We’re buying stocks thinking they’re awful close to getting washed out.”

source: www.abs-cbnnews.com

Oil hits 2015 peak after first US crude drawdown since January

NEW YORK - Oil prices hit 2015 peaks on Wednesday amid the first drawdown in U.S. crude inventories since January, before settling off their highs as investors and traders moved to take profits on a multi-week rally.

The dollar's tumble had also fed the run-up in oil and other commodities, as those raw materials became more affordable for holders of the euro and other currencies.

U.S. crude futures rallied more than $2 to the year's high of $62.58 a barrel, before settling just 53 cents higher at $60.93.

Futures of North Sea Brent, the more widely-used benchmark, reached a 2015 peak of $69.63 before turning negative at one point. It settled up 25 cents at $67.77.

U.S. gasoline and heating oil futures also hit their highs for the year, before gasoline closed more than 1 percent lower.

U.S. crude prices have risen every week since March 13, while Brent has seen weekly gains since April 3.

Wednesday's rise came after the U.S. Energy Information Administration said crude stockpiles fell 3.9 million barrels last week, the first drop in four months.

The draw was more than double that projected by industry group American Petroleum Institute. A Reuters poll of analysts had estimated U.S. crude stocks to rise last week for a record 17th week in a row.

The EIA data lent conviction to oil bulls' bets that the global oversupply in crude could finally be easing.

But skeptics said more work was needed to balance the market, which they said was overpriced after Brent's 21 percent rally in April and U.S. crude's 25 percent gain. Crude prices fell by more than 50 percent between June and January on worries of an oil glut.

"We have come up a long way in a short time," said John Kilduff, partner at New York energy hedge fund Again Capital, referring to the rally of recent weeks. "People will ultimately realize that prices above $60 a barrel are going to reopen lots of idled oil rigs, meaning more supply."

Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, noted that while last week's U.S. crude draw was bullish, there had been builds before for 16 straight weeks that had left more than 485 million barrels in storage.

"I'm not a big buyer of the idea that the fundamental picture has changed as yet. And the market continues to go higher as much as I feel it's overextended, and it doesn't look like the run up is over yet."

source: www.abs-cbnnews.com

Brent crude oil hits 2015 high

LONDON - Oil rose more than 3 percent on Thursday, pushing Brent crude to a 2015 high above $63 per barrel on increasing evidence that U.S. production is peaking, balancing a market that has been in heavy oversupply for more than a year.

Oil prices collapsed in the six months to January, pushing Brent down more than 60 percent to almost $45 a barrel.

But the market has gradually recovered this year as much lower prices have discouraged oil exploration and production, especially in the United States.

"People are realising that the U.S. production juggernaut is slowing, at least for now," said Virendra Chauhan, oil analyst at London-based consultancy Energy Aspects.

"U.S. production is down for the second time in three weeks and refinery runs are spiking up, driving demand higher."

Brent crude futures for June on Thursday hit $63.29 a barrel, the highest since December, after the previous much weaker front-month futures contract, for May, expired on Wednesday.

By 0835 GMT, June Brent was at $62.52 a barrel, down 80 cents from the previous close for June, but up sharply from Wednesday's close for May at $60.32.

U.S. crude was at $56.00, down 39 cents after hitting a 2015 high of $56.69 on Wednesday.

U.S. crude has been logging its strongest upswing this year as ebbing fears of an inventory overflow and renewed hedging in far-distance futures flatten the forward curve.

"We turn extremely bullish on oil," Singapore-based energy brokerage Phillips Futures said in a note to clients.

"This whole rally was primarily due to drops in U.S. crude production. We see the four-week average for crude production turning negative for the first time since July '14," it added.

Reuters technical analyst Wang Tao told Reuters Global Oil Forum that Brent could rise towards $70 a barrel in the near term, but that a sharp downturn could happen after that.

U.S. oil prices jumped on Wednesday after U.S. inventories built up more slowly than expected, although still to a new record. Talks between major oil producers also triggered speculation of production cuts, even though most analysts said these were unlikely.

Despite the oil price rally, the market remains oversupplied, analysts say.

"The recent bounce comes despite a surge in OPEC crude oil production in March which is likely to have been sustained in April," ANZ bank said.

source: www.abs-cbnnews.com

Oil turns lower in Asia, US crude stays below $50

SINGAPORE - Oil turned lower in Asia Tuesday as a feeble rebound failed to take hold, with prices under pressure in an oversupplied market.

US benchmark West Texas Intermediate (WTI) for April delivery was down 29 cents to $49.16. Brent crude for April fell 17 cents to $58.73 in afternoon trade, reversing gains in the morning.

WTI shed $1.36 in New York and Brent lost $1.32 in London the day before as US crude stockpiles lingered at historic levels, contributing to a global oversupply.

A closely watched report on US weekly crude stockpiles is next due on Wednesday, with a Bloomberg News survey saying inventories are expected to rise by 3.75 million barrels.

US oil stockpiles are already at their highest level on record at this time of year.

Globally, crude supplies are also being boosted after oilfields in eastern Libya resumed pumping to the port of Hariga after a pipeline was repaired, and oil producer Oman plans to ramp up output to 980,000 barrels a day this year, according to Bloomberg.

Crude prices lost about 60 percent of their value to about $40 between June and late January owing to an oversupply in world markets, a weak global economy and a strong dollar.

Prices have risen above multi-year lows following a slowdown in US oil drilling activities, but analysts say volatility is likely to continue for some time.

"It is apparent by now that drilling in the US will slow, global production growth is expected to be lower, and demand, at least in the US, is reacting positively to lower prices," British bank Barclays said in a report.

"In short, the market is forecast to remain oversupplied for most of 2015, but expectations beyond that are for more balanced fundamentals."

source: www.abs-cbnnews.com

Oil tops $60 for first time in 2015

LONDON - Oil rose above $60 a barrel on Friday for the first time this year, bringing its gain this week to almost 4 percent, supported by signs that deeper industry spending cuts may curb excess supply.

Also supporting oil, growth in Germany's gross domestic product beat expectations, as did plans for a meeting between Greek officials and creditors. Euro zone GDP data is due later on Friday.

The price of Brent crude collapsed from $115 in June to $45.19, the lowest in almost six years, in January due to oversupply. Since January, mounting signs of lower industry spending have helped prices move higher.

Apache Corp, a top U.S. shale oil producer, said on Thursday it would cut capital spending and its rig count in 2015 following the price collapse, keeping its output growth mostly flat.

Brent for April delivery was up 76 cents at $60.04 by 0917 GMT, after briefly gaining more than $1. The March contract expired overnight. U.S. crude was up 61 cents at $51.82.

"During the last weeks, crude oil rebounded driven by improved market sentiment and by expectations that low prices will lead to lower supply growth in 2015," said Daniela Corsini, analyst at Intesa Sanpaolo, in a report.

Besides Apache's update, Royal Dutch Shell's chief executive said on Thursday supply might not be able to keep up with growing demand as companies reduce budgets, and France's Total announced investment and job cuts.

Still, analysts at JBC Energy in Vienna pointed out in reference to Apache's moves that spending cuts can easily be reversed.

"While the company expects North American onshore production to be flat this year, they emphasise their flexibility to come back very quickly if the price environment or the cost structure changes sufficiently," JBC said.

"This is generally what makes most people doubt that the latest rally can be sustained."

A weaker U.S. dollar, which makes dollar-denominated commodities cheaper for holders of other currencies, has also supported oil this week, analysts say.

source: www.abs-cbnnews.com