Oil prices recovered their poise Thursday after slumping to 10-month lows on concerns of a glut in the market. However, concerns about the outlook remain and they weighed on a number of oil stocks in Europe.
KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 7,421 while Germany’s DAX was flat at 12,778. The CAC-40 in France was 0.3 percent lower at 5,256. Wall Street was poised for a flat opening with Dow futures and the broader S&P 500 futures down 0.1 percent.
OIL PRICES: The main focus in financial markets this week has been oil prices, which fell Wednesday to their lowest levels since August even though the OPEC oil cartel has along with Russia reduced production. On Thursday, a barrel of benchmark New York crude was up 19 cents at $42.72 a barrel while Brent, the international standard, rose 32 cents to $45.14 a barrel. In spite of those modest gains, oil prices have fallen more than 20 percent this year, breaking into what traders call a bear market. The decline has hit oil stocks as traders price in the possibility of lower earnings. Among the big fallers in Europe were France’s Total, which was down 1.2 percent, and Royal Dutch Shell, which fell 0.7 percent.
ANALYST TAKE: “With depressed oil, ongoing Brexit developments and political instability in the U.S. still weighing on sentiment, a pending stock market correction could be on the cards,” warned FXTM Research Analyst Lukman Otunuga.
ASIA’S DAY: The Shanghai Composite Index declined 0.3 percent to 3,147.45 and Tokyo’s Nikkei 225 lost 0.1 percent to 20,110.51. Hong Kong’s Hang Seng gave up 0.1 percent to 25,674.53. Sydney’s S&P-ASX 200 gained 0.7 percent to 5,706.00 and India’s Sensex was up 0.6 percent to 31,458.07. Seoul’s Kospi added 0.5 percent to 2,370.37.
CURRENCIES: The euro was flat at $1.1169 while the dollar fell 0.1 percent to 111.27 yen.