By March 16, 2016 Read More →

Oil prices rise after production freeze talks announced

Oil prices, energy stocks gain Wednesday morning

oil prices

Oil prices rose on Wednesday after Qatar’s energy and industry minister announced in April, major energy-producing nations will hold talks on freezing oil production. Chevron photo.

NEW YORK _ U.S. stocks rose Wednesday afternoon after the Federal Reserve left interest rates unchanged and forecast it will raise rates more gradually than it had envisioned late last year. That was a relief to investors, who quickly sent stocks higher. Energy companies climbed with the price of oil.

KEEPING SCORE: The Dow Jones industrial average climbed 113 points, or 0.7 per cent, to 17,364 as of 2:50 p.m. Eastern time. The Standard & Poor’s 500 index rose 13 points, or 0.7 per cent, to 2,029. The Nasdaq composite index added 36 points, or 0.8 per cent, to 4,765.

The Dow and S&P 500 were both down about 0.2 per cent before the Fed’s decision was announced.

FED TIME: The central bank left its benchmark interest rate unchanged, saying the U.S. economy continued to grow, but global economic and financial turmoil pose risks. Fed officials now expect to raise interest rates two times this year instead of four times.

The Fed raised the short-term rate it controls in December from nearly zero for the first time in almost a decade.

THE QUOTE: Boosts in interest rates tend to slow down economic growth. Jeremy Zirin, chief equity strategist for UBS Wealth Management Americas, said investors are glad the Fed is backing off.

“It probably eases investors’ minds that we’re unlikely to see a rate hike in April and it probably takes June off the table,” he said.

The Fed and the markets now seem to have the same view on interest rate increases, Zirin said, and that means the market may be a little less volatile.

ENERGY: Oil prices rose after the announcement that major oil producing countries will meet in Qatar in April to hold more talks about a freeze in oil output levels. A dea, which is far from a sure thing, could help relieve a global glut that has depressed oil prices.

Benchmark U.S. crude rose $2.12, or 5.8 per cent, to $38.46 a barrel in New York. Brent crude, the benchmark for international oils, rose $1.59, or 4.1 per cent, to $40.33 a barrel.

Energy companies were the biggest gainers in afternoon trading. Devon Energy gained $1.70, or 7.1 per cent, to $25.79 cents. Southwestern Energy rose 58 cents, or 8 per cent, to $7.81 and Oneok added $1.59, or 5.7 per cent, to $29.31.

HEAVY METAL: Metals prices were little changed, but mining and materials companies advanced following the Fed’s announcement. Newmont Mining rose 74 cents, or 2.8 per cent, to $27.11 and Alcoa added 49 cents, or 5.3 per cent, to $9.65.

The price of gold lost $1.20 to $1,229.80 an ounce. Silver decreased 4 cents to $15.22 an ounce. Copper was unchanged at $2.23 a pound.

BONDS, CURRENCIES: After the Fed’s decision, bond prices rose and the yield on the 10-year Treasury note fell to 1.94 per cent from 1.97 per cent. The euro jumped to $1.1217 from $1.1107 late Tuesday. The dollar also turned lower and fell to 112.55 yen from 113.10 yen.

STOCKS JUMBLED: It had been a mixed week on the market, with major indexes little changed. The market has risen for each of the last four weeks on mounting evidence that the U.S. economy remains in good shape overall despite the shaky state of other major economies. Oil prices have also surged over that period, bringing some relief to energy and financial stocks.

OUT OF POWER: Peabody Energy, the largest coal mining company in the U.S., is plunging after it said it is delaying an interest payment and may have to file for Chapter 11 bankruptcy protection. The stock sank $1.83, or 45.6 per cent, to $2.18.

SAW IT COMING: Software maker Oracle is rising after it reported mixed quarterly results and said it will buy back $10 billion in company stock. It picked up $1.69, or 4.4 per cent, to $40.43 and helped lift the tech sector.

INFLATION PUMPED UP: The Labor Department said core inflation, or inflation that leaves out energy and food prices, continued to rise. It’s up 2.3 per cent over the last year, the largest gain in almost four years. Overall inflation slipped in February because of lower gas prices and it’s up just 1 per cent in the last year. The Fed has been looking closely at inflation as it considers raising interest rates. Though one of the Fed’s main goals is to prevent runaway inflation, it wants to see inflation rise more than it has in recent years to be sure the economy is healthy enough to handle higher rates.

Separate reports showed construction of new homes continued to grow in February, but applications were weak again, a sign of future trouble. Meanwhile U.S. factories made more machinery, appliances and computer in February. It’s the second straight monthly increase and a sign manufacturing is improving.

OTHER ENERGY TRADING: Wholesale gasoline rose 1 cent to $1.42 a gallon. Heating oil gained 5 cents, or 4.5 per cent, to $1.23 a gallon. Natural gas rose 2 cents to $1.87 per 1,000 cubic feet.

LAGGARDS: Health care stocks, which tumbled on Tuesday, continued to struggle. Drugmakers Pfizer and Merck were the largest losers on the Dow.

OVERSEAS: Germany’s DAX gained 0.4 per cent and Britain’s FTSE 100 added 0.5 per cent. France’s CAC 40 fell 0.2 per cent. Asian stocks were also mixed, as Japan’s benchmark Nikkei 225 slipped 0.8 per cent and South Korea’s Kospi added 0.3 per cent. Hong Kong’s Hang Seng lost 0.2 per cent to while the Shanghai Composite index rose 0.2 per cent.

The Canadian Press.

Posted in: News

Comments are closed.