Oil price rally on OPEC hopes helps shore up stocks

European stock markets eked out some modest gains Monday as oil prices pushed higher amid hopes of an upcoming production-cut deal from the Organization of the Petroleum Exporting Countries

By: AP | London | Published:November 21, 2016 8:38 pm
opec meet, oil prices, opec output, oil prices fall, oil price dollar, opec oil, opec meet doha, business news Organization of the Petroleum Exporting Countries (File Photo)

European stock markets eked out some modest gains Monday as oil prices pushed higher amid hopes of an upcoming production-cut deal from the Organization of the Petroleum Exporting Countries.

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KEEPING SCORE: In Europe, Germany’s DAX was up 0.3 percent at 10,700 while France’s CAC-40 index rose 0.5 percent to 4,526. The FTSE 100 index of leading British shares was 0.4 percent higher at 6,804. US stocks were poised for modest gains at the bell with Dow futures and the broader S&P 500 futures up 0.2 percent.

FOCUS SHIFTING: For the past couple of weeks, the main driver in markets has been the election of Donald Trump as the next U.S. president. In general, his victory has helped stocks and the dollar but weighed on bonds. But slowly attention is shifting onto other matters, including next month’s widely anticipated interest rate hike from the Federal Reserve.

OPEC LOOMING: Also generating attention is the next meeting of oil ministers from the OPEC oil cartel on Nov. 30 in Vienna, Austria. Expectations are growing that the ministers will push through a production cut following an indication recently that one was on the cards. That’s helped buoy oil prices in markets. Benchmark New York crude was up 91 cents, or 1.9 percent, at $47.25 a barrel while Brent crude, the international standard rose 96 cents, or 2.1 percent, to $47.82. Oil stocks have tracked prices higher. BP, for example, was up 2.2 percent, while Total’s rose 1.7 percent.

ANALYST TAKE: “This is still not a done deal and although many of the countries involved are making the right noises we must not forget how challenging it will be to try to push a production cut deal through, with differing ambitions from the different parties involved. If no deal is reached we could expect oil to test $40 per barrel,” said Fiona Cincotta, market analyst at City Index.

ASIA’S DAY: Japan’s benchmark Nikkei 225 index rose 0.8 percent to end at 18,106.02 and the Shanghai Composite Index added 0.8 percent to 3,218.15. However, South Korea’s Kospi dipped 0.4 percent to 1,966.05 and Hong Kong’s Hang Seng edged up less than 0.1 percent to 22,357.78. Australia’s S&P/ASX 200 slipped 0.2 percent to 5,351.30 and India’s Sensex lost 1.5 percent to 25,764.83. Taiwan’s benchmarks rose but those in Singapore, Indonesia and the Philippines sagged.

RENMINBI RETREAT: Chinese authorities set the yuan’s official “parity rate,” known as the fix, for the country’s tightly controlled currency 189 basis points lower to 6.8985 against the dollar. It’s the 12th day in a row Beijing has guided the yuan lower, amid suspicions Beijing is willing to let the currency weaken to help exports. The yuan, also known as the renminbi, hasn’t been this weak since the depths of the global financial crisis in 2008. The currency’s decline has hastened after Donald Trump’s US election victory. He has vowed to brand China a currency manipulator as part of measures to counter what he says are unfair trade practices.

CURRENCIES: The dollar shed some recent gains on Monday. The euro was up 0.5 percent at $1.0638 while the dollar fell 0.1 percent to 11.79 yen.