No deal on oil at OPEC, but markets took the news in their stride – oil prices fell, then rebounded, gold eased, shares started sluggishly on Wall Street before ending higher, and overnight trading on the ASX 200 futures saw a 40 point gain pencilled in for the local market this morning.
And the European Central Bank met and left rates and its spending program unaltered, but raised estimates for growth and inflation for this year and next in a small bullish point for markets.
Markets will now focus on the May jobs report in the US tonight, our time and its contents will be important for thinking on the timing of the next US rate rise.
But for local investors, another fall in spot iron ore prices will focus attention on the shares of majors like BHP Billiton, Fortescue Metals and Rio Tinto. Iron ore lost 1.4% to end at $US47.80, the lowest since early February.
But the outlook is for a gain this morning, which could end the losing streak this week.
A three-day sell-off up to yesterday has taken the Australian sharemarket back to levels last seen in early May. The market closed near the session’s lows yesterday with the ASX200 index dropping 0.8% to 5278.9 – its lowest close since May 4 – and the All Ordinaries lost 0.7% to 5324.2.
Oil futures ended higher overnight thanks to weekly figures showing weekly declines in US crude stocks and production. The data outweighed earlier negative pressure from the Opec failure to reach a pact to limit production at the half year meeting in Vienna.
In New York, July West Texas Intermediate crude settled at $US49.17 a barrel on the New York Mercantile Exchange, up 16 cents, or 0.3%, recovering from an earlier dip below the $48 mark.
August Brent crude settled up 32 cents, or 0.6%, at $US50.04 a barrel in London. That was the best finish for Brent prices since November.
The US Energy Information Administration reported that stocks of crude fell by 1.4 million barrels for the week ended May 27.
And US domestic production fell by another 32,000 barrels to 8.735 million barrels a day.Both bits of data proved to be more important to oil traders than Opec’s meeting and lack of a result.
The Opec meeting saw the new Saudi oil leadership suggest that the group should “encourage the rebalancing” of the market, comments which sent prices higher earlier in the day. But the feeling was there no need for any capon output because oil prices have risen without any intervention from Opec.
Opec president Dr Mohammed Bin Saleh Al-Sada said in a statement:
"The oil price has started to increase but we are yet to see it return to a level that gives reasonable return to producers to continue investing…We have seen a drop in non-OPEC production while OPEC production has grown. If the oil price remains where it is today it will lead to a further drop in supply”.
In other words, no need for a cap – something Iran was arguing against anyway, insisting on individual caps for each member nation, with Iran’s set above 4 million barrels a day?
Comnex gold futures settled at more than three-month low on mounting expectations of an imminent US interest-rate rise from the Fed this month or next.
June gold futures slipped $US2.10, or 0.2%, to settle at $US1,209.80, its lowest since mid-February.
Comex July silver rose 10 cents, or 0.6%, to settle at $US16.03 an ounce, while Comex copper futures eased to $US2.07 a pound and looking weak.
Elsewhere on Comex, high-grade copper for July delivery slipped by less than a cent to settle at $US2.07 a pound. On Wall Street the S&P 500 index rose 5.93 points, or 0.3%, to 2,105.26, the highest close for the index since November 3, last year, when the index closed at 2,109.79, according to FactSet data.
The Dow added 48.89 points, or 0.3%, to 17,838.56, and the Nasdaq rose 19.11 points, or 0.4%, to 4,971.36, following a drop of 28 points earlier in the session.
