Oil drops amid caution over OPEC meeting; stocks mixed
Posted 7:52 a.m. Tuesday
Updated 7:54 a.m. Tuesday
KUALA LUMPUR, Malaysia — The price of oil dropped and stock markets were mixed Tuesday as it became uncertain whether OPEC countries might reach an agreement to cut crude production at their meeting this week.
KEEPING SCORE: Among stocks, London's FTSE 100 index shed 0.4 percent to 6,770 while France's CAC 40 advanced 0.8 percent to 4,544 and Germany's DAX added 0.2 percent to 10,603. On Wall Street, futures for the Dow Jones industrial average and the Standard & Poor's 500 index both rose 0.2 percent.
Benchmark U.S. crude fell another $1.22 to $45.86 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, tumbled $1.20 to $47.04 in London.
OPEC WATCH: The Organization of the Petroleum Exporting Countries meets Wednesday to discuss output cuts, which it had provisionally agreed in September are needed to boost oil prices. Saudi Arabia, however, has sounded skeptical about the prospects of a deal being firmed up. An agreement is complicated by its rivalry with Iran, which is hesitant to limit its own output as it ramps up production following years of international sanctions.
ITALY VOTE: Investors are also keeping an eye on Italy's popular vote on constitutional changes Dec. 4 that would limit the power of the upper house and make it easier for governments to pass legislation. Prime Minister Matteo Renzi has said he will resign in case of a "no" result. New elections, if they are held, could bring to power the Five Star Movement, which has said it wants to hold a referendum on euro membership.
ANALYST TAKE: Investors are focused on the OPEC meeting, said Mizuho Bank. "Oil prices are likely to remain choppy, fluctuating in tandem with news flow," it said in a report. Worries over Italy's referendum loom. "Apart from political instability, a negative referendum outcome could hurt Italian banks and renew financial stress in the European Union," DBS Bank said in a report.
CURRENCIES: The euro edged down to $1.0583 from $1.0587 on Monday. The dollar strengthened to 113.06 yen from 111.89 yen.