Oil prices surge on OPEC production cut expectations
Posted November 30
LONDON — Oil prices surged Wednesday on expectations of a production cut from the OPEC cartel of producers. Shares in oil companies rose in the slipstream of higher oil prices, helping indexes around the world to post solid gains.
OIL WATCH: The international benchmark for crude oil, Brent, soared $3.80, or 8.2 percent, to $50.18 a barrel as oil ministers from the Organization of the Petroleum Exporting Countries seemed to focus less on whether there would be a cut and more on how it would be shared among members. A decision to cut production could have a lasting impact on consumers, as oil price increases feed into the cost of car fuel, heating and electricity. The rate traded in New York was up $3.35, or 7.4 percent, to $48.65 a barrel.
ANALYST TAKE: "No official announcement has been made yet, but the markets seem convinced about the outcome," said Fawad Razaqzada, an analyst at Forex.com. "The only thing speculators are not too sure about yet is the detail of the deal: who will cut oil production and by how much, and who will freeze and at what levels?"
OIL STOCKS: Higher oil prices mean more revenue for firms extracting oil. Unsurprisingly, oil stocks got a big boost from the higher crude rates in the markets. Britain's BP, for example, saw its share price spike 3.4 percent, while France's Total rose 1.7 percent. Spain's Repsol advanced 4.5 percent and Italy's ENI bounced 3.2 percent.
STOCK MARKETS: In Europe, France's CAC 40 was up 0.7 percent at 4,581 while Germany's DAX rose 0.3 percent to 10,647. The FTSE 100 index of leading British shares was 1 percent higher at 6,837. Wall Street was poised for modest gains, with Dow futures and the broader S&P 500 futures up 0.3 percent.
ASIA'S DAY: Japan's benchmark Nikkei 225 was flat, finishing at 18,308.48, and Australia's S&P/ASX 200 dropped 0.3 percent to 5,440.50. South Korea's Kospi gained 0.3 percent at 1,983.48 and India's Sensex gained 0.5 percent to 26,536.49. Hong Kong's Hang Seng gained 0.2 percent to 22,789.77, while the Shanghai Composite slipped 1 percent to 3,250.03 on talk regulators might crack down on overseas investments. Shares were higher in Indonesia, Taiwan and Thailand.
CURRENCIES: The euro was down 0.4 percent at $1.0619 while the dollar jumped 1.1 percent to 113.45 yen.