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Oil rallies on Opec optimism, energy producers shares climb

A soldier patrols in front of the headquarters of the Organisation of the Petroleum Exporting Countries (Opec) in Vienna November 29, 2016. — Reuters pic
A soldier patrols in front of the headquarters of the Organisation of the Petroleum Exporting Countries (Opec) in Vienna November 29, 2016. — Reuters pic

VIENNA, Nov 30 — Optimism Opec ministers in Vienna will salvage a deal to cut production reverberated through the financial markets, spurring oil’s biggest gain in two weeks and sending stocks of energy producers and currencies of commodity-exporting nations higher.

Crude bounced off a two-week low as Iranian Oil Minister Bijan Namdar Zangeneh said producers will reach an agreement without his country freezing production. Russia’s rouble, Norway’s krone and Mexico’s peso advanced as oil companies led European stocks higher for the second day. Royal Bank of Scotland Group Plc slipped 4 per cent after failing the Bank of England’s toughest-ever stress test.

“Oil prices are driving today’s gains — anything other than a production cut and we’ll head south,” said Stuart Samuels, a London-based sales trader at Oppenheimer Europe. “Markets tracking the move in crude near-term is causing some volatility. I’d be inclined to take some profits.”

Crude prices have swung between gains and losses this week before the make-or-break meeting and set the tone for global macro trades as investors weighed prospects for a deal that was assigned market odds of just 30 per cent, according to Goldman Sachs Group Inc. Iraq Oil Minister Jabbar al-Luaibi says Opec ministers unanimous for output cut. Noureddine Boutarfa, Algeria’s Minister of Energy, says nation ready to reduce output.

Commodities

WTI crude futures added 4.9 per cent to US$47.43 a barrel as of 10:03 am in London, clawing back yesterday’s 3.9 per cent tumble.

Iran’s oil minister said there were acceptable proposals on the table, but his country would not countenance a freeze or cut based on current levels.

Saudi Arabia has said it is ready to reject an agreement unless all Opec members — excluding Libya and Nigeria — take part, people familiar with the kingdom’s position said.

Base metals rebounded in London, with zinc climbing 1.5 per cent and copper up 0.5 per cent. The London Metal Exchange Index tumbled 3.4 per cent yesterday, its biggest one-day retreat in more than a year. Gold for immediate delivery was little changed at 1,188.74 an ounce; it’s down 6.9 per cent since October 31, poised for its worst month since June 2013. — Bloomberg

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