Oil Prices Rise on Supply Worries
Oil prices rose Monday on worries about threats to the global supply of crude, while world stock markets ended mixed on a trading day quieted by Wall Street’s holiday closure.
Tokyo’s Nikkei Stock Average slid 179.78 points, or 1.5%, to 11,541.71. Traders said market players were increasingly nervous about prospects for U.S. stocks with quarterly earnings reports expected this week. Tokyo often closely tracks the U.S. market.
The FTSE 100 index of leading British shares closed 0.1% lower at 4,403.30, as higher oil prices underpinned energy stocks but limited gains for stocks of firms vulnerable to oil-related expenses.
Oil prices rose as a possible halt to output from one of Russia’s largest producers, Yukos, and attacks on Iraqi pipelines threatened international supply. Crude futures in Europe and Asia also took support from uncertainty about whether the Organization of the Petroleum Exporting Countries would carry out a planned production increase of 500,000 barrels a day.
The price of crude on London’s International Petroleum Exchange climbed 38 cents to $36.30 a barrel.
Exports from Iraq’s southern terminals fell to 960,000 barrels Saturday after saboteurs blew a hole in one of two feeder pipelines. Iraqi exports were cut further Sunday by an attack on a north-south pipeline through which oil from northern Iraq was being diverted south. Northern crude usually is pumped through a pipeline to Turkey, but earlier sabotage forced the diversion.
“An expectation that things were going to improve after the handover had been factored into the market. But things this weekend certainly placed a question mark next to that assumption,” said Kevin Norrish of Barclays Capital in London.
Traders said supply from Yukos remained under threat even after the company reported Sunday that police had not seized vital equipment used to keep its vast oilfields running. Russia is the world’s second-largest oil exporter after Saudi Arabia.
Yukos, which is almost $7 billion in arrears on taxes, sought to calm markets Monday by saying it planned no export cuts this month, and had paid pipeline monopoly Transneft to transport Yukos oil through the end of July.
Yukos has been given a deadline of Wednesday to settle a $3.4-billion bill for back taxes.
The prospect of more monetary tightening after last week’s interest rate hike in the U.S. kept the dollar soft against major foreign currencies. The dollar was hovering near one-month lows at around $1.223 against the euro, but had recovered about 0.7% against the yen to 109.
A weaker dollar boosted gold, which rose for a fourth consecutive trading day in London. Gold for immediate delivery was up $1.10, or 0.3%, at $398.75 an ounce.
The CAC 40 index of French blue chips ended 0.1% higher at 3,688.18, with strength in energy shares offset somewhat by weakness in the automotive sector. In Frankfurt, the DAX index of Germany’s biggest companies slipped 0.1% to 3,995.73 in quiet trading.
“It’s been very dull. No Wall Street generally kills interest,” said Graham Orton, a dealer at the London brokerage Marshall Securities Ltd.
Elsewhere in Europe, markets in Milan and Madrid both finished higher, up 0.1% and 0.3% respectively.
Other exchanges ended in negative territory, with Amsterdam down 0.6%, Stockholm lower 0.4%, and Zurich off by 0.3%.
In Hong Kong, the key Hang Seng Index edged up 31.98 points, or 0.3%, to 12,252.11. Prices opened lower as investors took their cue from last week’s declines on Wall Street but rose later in the session on selective bargain hunting, brokers said.
On Friday in New York, U.S. stocks fell after the Labor Department said the economy created 112,000 jobs in June, less than half the number economists had expected.
The Dow Jones industrial average fell 51.33 points, or 0.5%, to 10,282.83. The Nasdaq composite index lost 8.89 points, or 0.4%, to 2,006.66, while the Standard & Poor’s 500 index slipped 3.56 points to 1,125.38.
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Associated Press, Bloomberg News and Reuters were used in compiling this report.
