Oil prices rose yesterday on optimism that demand could improve in Asia and after data showed a drop in US crude oil inventories, helping boost a measure of stock markets worldwide.
The outlook for oil demand in Asia was boosted by news of an unexpected jump in Japan’s core machinery orders in October and by reforms aimed at encouraging imports in China, including of energy-intensive machinery.
US crude was supported by data showing a surprise 1.9-million-barrel fall in US crude inventories to 488 million barrels last week. The rise in oil prices came after a brutal sell-off that sent prices to their lowest in nearly seven years on Tuesday.
Brent crude was last up 40 cents at $40.66 a barrel. US crude was last up 42 cents at $37.93 per barrel.
While many investors expect oil to fall below 2008 lows due to a global supply glut, the rebound helped US shares, which were also boosted by reported merger talks between Dow Chemical and DuPont.
Dow Chemical was last up over 11 per cent while DuPont was last up 13 per cent.
MSCI’s all-country world equity index, which tracks shares in 45 nations, was last up 0.54 per cent, at 403.32.
The Dow Jones industrial average was last up 152.33 points, or 0.87 per cent, at 17,720.33. The S&P 500 was up 10.38 points, or 0.5 per cent, at 2,073.97. The Nasdaq Composite was off 0.13 per cent at 5,091.62.
Europe’s broad FTSEurofirst 300 index was last down 0.33 per cent, however, at 1,433.07.
The US dollar slumped as commodity-linked currencies reversed steep losses with the recovery in oil prices, while the euro and yen both hit one-month highs versus the dollar. Analysts still expect the dollar to rise in the coming weeks.
The dollar index, which tracks the greenback versus a basket of six currencies, was last down 0.83 per cent at 97.661.
“Most investors would probably continue thinking that the euro should be trending lower, especially with the (expected) Fed hike next week," said Charles St-Arnaud, senior strategist at Nomura Securities in London, in reference to the Federal Reserve.
US Treasury debt yields rose in thin volume, as the rally in oil buoyed market sentiment.
Benchmark 10-year Treasury notes were last down 7/32 in price to yield 2.26 per cent, from a yield of 2.24 per cent late on Tuesday.
Gold initially rose 1 per cent, supported by dollar softness, but investors remained cautious ahead of the anticipated Fed rate rise next week and spot gold reversed course to be down $2.72 to $1,071.59 an ounce.