Sharechat Logo

While you were sleeping: Oil gains on inventory drop

Thursday 17th September 2015

Text too small?

Equities on both sides of the Atlantic rose with oil prices as the US Federal Open Market Committee began a two-day meeting that may result in its first interest rate rise since 2006.

In New York trading at about 3.25pm, the Dow Jones industrial average advanced 0.80 percent, the Standard & Poor’s 500 Index gained 0.78 percent, while the Nasdaq Composite Index increased 0.45 percent.

Gains in shares of General Electric, last up 2.4 percent, led the Dow higher.

Shares of Chevron and Exxon Mobil also rose, both last up 1.9 percent, after oil climbed following an Energy Information Administration report showing US crude inventories fell 2.1 million barrels last week.

West Texas Intermediate for October delivery climbed 4.7 percent to US$46.69 a barrel, while Brent for November settlement rallied 3.4 percent to US$49.37 a barrel.

“The major reason for the inventory decline is that refiners ramped up production,” Craig Bethune, a fund manager at Manulife Asset Management in Toronto who focuses on energy and natural resources investments, told Bloomberg. “They probably wanted to take advantage of the lower crude price.”

While the gain in oil added to the positive sentiment on Wall Street, all eyes are firmly on the conclusion of the Fed meeting on Thursday. Fed Chair Janet Yellen will give a press conference.

“If you asked most people in early August, they’d say it’s very likely the Fed would raise rates in mid-September, and I don’t think people will be surprised if they do,” George Schultze, who oversees US$200 million as founder and managing member of Schultze Asset Management in Purchase, New York, told Bloomberg.

Of the 80 economists polled by Reuters, only 35 said the central bank is likely to raise rates this week.

"The market is getting incrementally more comfortable that if the Fed is going to raise rates it's doing it for the right reasons," John Canally, investment strategist at LPL Financial, told Reuters. "We've been obsessing about it for so long and maybe its finally dawned on the market that the 'when' doesn't matter as much as how far and how fast the Fed will go."

Inflation data certainly would not prompt any rush. A Labor Department report showed the consumer price index eased 0.1 percent, the first decline since January, following a 0.1 percent increase in July.

"One thorn in the Fed's side is inflation," Mike Moran, head of economic research for the Americas at Standard Chartered Bank in New York, told Reuters. “I don't think today's CPI number really advances the debate on whether we are any closer to getting to that 2 percent target that the Fed is clearly focused on.”

Shares of FedEx fell, last 3.4 percent weaker, after the company reported quarterly profit that fell short of expectations and downgraded its full-year earnings forecast.

In Europe, the Stoxx 600 Index ended the session with a 1.5 percent jump from the previous close. Germany’s DAX Index rose 0.4 percent, the UK’s FTSE 100 Index added 1.5 percent, while France’s CAC 40 Index increased 1.7 percent.

Shares of SABMiller rallied 20 percent after the company said Anheuser-Busch InBev intends to make a proposal to acquire it.

(BusinessDesk)

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report