Friday 26 May 2017

Stocks rise but oil plunges despite OPEC output cut extension

Markets were mostly higher on Thursday.

The S&P 500 rose 0.4 percent, the Nikkei 225 rose 0.4 percent and the Shanghai Composite jumped 1.4 percent.

However, the STOXX Europe 600 fell 0.1 percent.

Oil fell amid disappointment that the Organization of the Petroleum Exporting Countries’ decided to extend production cuts by just nine months. West Texas Intermediate crude plunged 4.8 percent while Brent fell 4.6 percent.

However, some analysts see hope that a big drop in US oil stocks is finally on the way.

US crude stocks peaked at 533 million barrels in March and were at 516 million as of last week. Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut, said that “we'll easily get below 500 million barrels over the next six to eight weeks”.

“At the pace sustained since the start of March, the crude surplus would be totally gone by end-December,” Standard Chartered analysts said in a note this week.

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