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Business

Oil Hits $50 for First Time This Year, Helping Stocks Higher

Oil prices are rising after a U.S. government reported a larger-than-expected drop in fuel stockpiles last week

An electronic board displays stock prices at a private stock market gallery in Kuala Lumpur, Malaysia, photo: AP/Joshua Paul
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2 years ago

Stock markets around the world edged higher Thursday as traders interpreted the rise in oil prices to $50 a barrel for the first time this year as a positive sign for the global economy.

KEEPING SCORE: In Europe, Britain’s FTSE 100 was up 0.1 percent at 6,271 while France’s CAC rose 0.7 percent to 4,511. Germany’s DAX continued its rapid ascent, rising 0.7 percent to 4,511. U.S. stocks were poised for a steady open too, with Dow futures and the broader S&P 500 futures up 0.1 percent.

OIL RALLY: Oil prices are rising after a U.S. government reported a larger-than-expected drop in fuel stockpiles last week. The benchmark New York rate was up 51 cents at $50.07 a barrel while Brent crude, which is used to price international oils, rose 60 cents to $50.34 a barrel. Neither rate has been above $50 a barrel since November. Oil prices have been rising steadily over the past few months on a combination of factors, including waning concerns over the scale of the economic slowdown taking place in China.

ANALYST TAKE: “This move does appear to have been coming for the last couple of weeks, the question now is whether it can establish itself in a new range between $50 and $55,” said Craig Erlam, senior market analyst at OANDA. “While supply disruptions are likely to continue to support prices for now, a further strengthening in the dollar over the next couple of months could act as something of a counterweight and keep prices in check.”

Malaysian men checks their mobile trading application at a private stock market gallery in Kuala Lumpur, MalaysiaPhoto/Joshua Paul

Malaysian men checks their mobile trading application at a private stock market gallery in Kuala Lumpur, Malaysia. Photo: AP/Joshua Paul

U.S. DATA FOCUS: Another key driver in markets recently, which is likely to remain so over the coming few weeks, is the question of whether the U.S. Federal Reserve will raise interest rates again at its next policy meeting in June. A run of comments from Fed officials indicates that the decision is finely balanced. Given that backdrop, U.S. economic figures will carry additional weight. Later Thursday, traders will have a raft of data to digest, including weekly jobless claims, monthly pending home sales and durable goods orders.

CURRENCIES: The dollar, which has enjoyed a strong bounce in recent weeks on speculation of an imminent rate hike, could be among the main market movers in connection with the U.S. economic newsflow. Ahead of the figures later, the euro was up 0.2 percent at $1.1170 while the dollar fell 0.1 percent to 110.11 yen.

ASIA’s DAY: Japan’s Nikkei 225 index added nearly 0.1 percent to close at 16,772.46. China’s Shanghai Composite rose 0.3 percent to 2,822.44 and Hong Kong’s Hang Seng index added 0.14 percent to 20,397.11. Australia’s S&P/ASX 200 rose 0.3 percent to 5,388.80.

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