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US stocks join global rally as energy prices jump again

Energy prices so low, industry is making production cuts

energy prices

Energy prices rose Friday morning as a rally that began in Asia reached America.  Shell photo.

NEW YORK _ U.S. stocks are jumping Friday morning as a rally that started in Asia reaches America and energy prices continue to climb from their recent lows, lifting oil and gas stocks.

Keeping Score: The Dow Jones industrial average gained 233 points, or 1.5 per cent, to 16,115 as of 10:20 a.m. Eastern time. The Standard & Poor’s 500 index rose 36 points, or 1.9 per cent, to 1,904. The Nasdaq composite climbed 104 points, or 2.3 per cent, to 4,576.

Energy Prices Rise: U.S. crude oil rose $2.15, or 7.4 per cent, to $31.68 a barrel in New York. That’s its highest price in about two weeks. Brent crude, a benchmark for international oils, added $2.39, or 8.1 per cent, to $31.59 a barrel in London. Oil has dropped to its lowest price in about 12 years

Wholesale gasoline rose 4.4 per cent to $1.08 a gallon and heating oil climbed 7.9 per cent to 97 cents a gallon.

Energy stocks: Pipeline operator Kinder Morgan rose $1.48, or 10.7 per cent, to $15.36 after it jumped 15 per cent Thursday. Pipeline company Williams Cos. added $2.14, or 13.3 per cent, to $18.18. Chesapeake Energy, the worst-performing stock on the S&P 500 in 2015, rose 32 cents, or 9 per cent, to $3.87.

Changes for Energy: Goldman Sachs analyst Jeffrey Currie said energy prices have fallen so far that the industry is making real cuts in production. “We are now at a price level that is creating real fundamental change,” he said.

Currie said it will take a long time for the market to recover from the huge decline in energy prices. But he said prices are down because of a glut in oil supplies, not because demand is collapsing.

Global Gains: Japan’s Nikkei 225 index rose 5.9 per cent as investors hope the Bank of Japan will promise more stimulus for the country’s economy. The Nikkei had its day since September. Earlier this week the index entered a bear market, meaning it’s down 20 per cent from its recent peak.

South Korea’s Kospi gained 2.1 per cent and Hong Kong’s Hang Seng added 2.9 per cent. The Shanghai Composite Index in mainland China climbed 1.3 per cent.

Eurostep: A rally in Europe got stronger as investors there hoped for more stimulus as well. On Friday European Central Bank head Mario Draghi said the bank has a lot of options to boost inflation and is determined and willing to act. On Thursday Draghi suggested the ECB will consider more stimulus action at its next meeting in March.

France’s CAC 40 added 3.8 per cent and Germany’s DAX rose 2.7 per cent. Britain’s FTSE 100 climbed 2.4 per cent.

Schlumberger’s plans: The largest oilfield services company in the world said it cut 10,000 jobs in the fourth quarter after eliminating some 20,000 earlier in 2015. However Schlumberger said it will buy back $10 billion in stock. Its share price has fallen 25 per cent over the last year. The stock rose $3.06, or 5 per cent, to $64.51.

AMEX tumbles: Credit card company American Express said it wants to cut $1 billion in spending in the next two years in response to the strong dollar, which hurts its revenue, and tough competition. Its stock fell $6.09, or 9.7 per cent, to $56.55.

GE Struggles: General Electric’s fourth-quarter revenue fell short of analysts’ estimates. The company’s industrial division struggled. That has been an area of renewed focus for GE as it sells off financial businesses and its appliance unit. GE lost 56 cents, or 2 per cent, to $28.03.

Bonds U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 2.08 per cent from 2.03 per cent a day earlier.

Currencies: The US dollar rose to 118.55 yen from 117.50 on Thursday. The euro weakened on the prospect of further ECB stimulus. It fell to $1.0810 from $1.0875.

The Canadian Press

Posted in: Energy Financial

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