Crude oil bounced back from its lowest level yesterday since November on the likelihood that key producers could extend output cuts beyond an agreed-on June deadline, while a global stocks index set a fresh record high as corporate earnings remained strong.
Markets were rattled overnight as crude stumbled further, its weekly decline close to 10 per cent at one point, but comments from Saudi Arabia’s Opec governor helped put a floor under oil prices.
“There’s an emerging consensus among participating countries on the need to extend the production agreement reached last year,” Adeeb Al-Aama said.
Opec, Russia and other producers have agreed to curb production by 1.8 million barrels per day until June 30. Opec ministers next meet on May 25.
Better-than-expected US non-farm payrolls data showed jobs growth rebounded sharply last month with 211,000 added and the national unemployment rate down to near a 10-year low of 4.4 per cent.
On Wall Street, the energy sector of the S&P 500 was posting its strongest daily showing since late March while the benchmark S&P, despite the strong payrolls report, remained in the tight range it has kept over the past two weeks.
“Opec is going to continue the cuts. The question is, is that enough to keep oil prices at a level that is good for business and for producers?” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
“Today it has helped to the overall turn on the markets.”
The Dow Jones Industrial Average fell 9.72 points, or 0.05 per cent, to 20,941.75, the S&P 500 gained 3.08 points, or 0.13 per cent, to 2,392.6 and the Nasdaq Composite added 5.07 points, or 0.08 per cent, to 6,080.41.
The pan-European FTSEurofirst 300 index rose 0.61 per cent and MSCI’s gauge of stocks across the globe gained 0.31 per cent.
Emerging market stocks lost 0.27 per cent. Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.66 per cent lower.
Both Brent and US crude fell almost four per cent overnight on mounting concerns about oversupply. But by late morning trading in New York, weekly declines of close to 10 per cent were all but halved.
Concerns over a slowdown in China have hit other commodities this week, with Chinese iron ore futures down more than 10 per cent this week’s low and copper touching its lowest since January.
Prudential’s Krosby said the slide in commodities would not necessarily drag other markets lower “as long as you accept the thesis that it is all about supply.”
US crude rose 1.89 per cent to $46.38 per barrel and Brent was last at $49.26, up 1.82 per cent on the day.