The News
The News
Friday 01 of December 2023

Oil Prices Down Sharply ahead of OPEC Announcement

A woman walks past a screen showing the Hang Seng Index at a bank in Hong Kong,photo: AP/Kin Cheung
A woman walks past a screen showing the Hang Seng Index at a bank in Hong Kong,photo: AP/Kin Cheung
The benchmark New York rate was down 1.3 percent at $50.72 a barrel

Oil prices were volatile but trading sharply lower Thursday ahead of an expected announcement from the OPEC oil cartel that it will extend recent production cuts for a further nine months. Elsewhere, stock markets were unmoved by further indications from the Federal Reserve that it may raise interest rates again as soon as next month.

KEEPING SCORE: In Europe, Germany’s DAX was down 0.1 percent at 12,626 while the CAC 40 in France was flat at 5,340. The FTSE 100 index of leading British shares was also steady at 7,512. Wall Street was poised for a slightly perkier opening, with Dow futures and the broader S&P 500 futures up 0.3 percent.

OPEC IN FOCUS: OPEC and other oil nations meeting Thursday appeared set to extend their production cuts in an effort to shore up prices. The latest reductions have been in effect since November, when the Organization of the Petroleum Exporting Countries agreed to cut production by 1.2 million barrels a day. Non-OPEC countries led by Russia chipped in with a further 600,000-barrel reduction.

OIL PRICES: Oil prices were sharply lower but up from an earlier 3 percent slump. The benchmark New York rate was down 1.3 percent at $50.72 a barrel while Brent, the international standard, fell 1.1 percent to $53.35. Analysts reckon oil prices will remain volatile through the day until the decision.

ANALYST TAKE: “While a nine-month extension to production cuts is widely anticipated, comments from delegates are expected to move prices significantly and remain a driver throughout the day,” said Henry Croft, research analyst at Accendo Markets.

FED: According to the minutes from the Federal Reserve Open Market Committee on Wednesday, officials signaled that they would soon be ready to resume raising interest rates if economic data came in line with their expectations. They wanted more evidence that a recent slowdown in U.S. growth was “transitory before taking another step” to raise rates. They also discussed steps for shrinking the U.S. central bank’s $4.5 trillion in bond holdings. The comments indicate policymakers are sticking to their plans to gradually remove the stimulus that has helped prop up stock markets for years.

RATING REDUX: Investors in Asia shrugged off a Moody’s one-notch downgrade of Hong Kong’s credit rating shortly after it cut its China rating because of rising debt levels, citing tight links between the two places. Chinese markets appeared to be more focused on growing speculation that MSCI might include mainland Chinese shares to its benchmark next month.

ASIA’S DAY: The Nikkei 225 stock index in Tokyo climbed 0.4 percent to close at 19,813.13 and Hong Kong’s Hang Seng rallied 0.8 percent to 25,630.78. South Korea’s Kospi jumped 1 percent to 2,342.93 while the Shanghai Composite index gained 1.4 percent to 3,107.83. Australia’s S&P ASX 200 rose 0.4 percent to 5,789.60. Shares were also higher in Taiwan and Southeast Asia.

CURRENCIES: The euro was flat at $1.1215 while the dollar edged up 0.2 percent to 112.78 yen.