Market and product

Following a jump of more than $2/bbl in Asian trading earlier on Monday, crude futures were less volatile by 09:30 GMT as stocks in both Asia and Europe registered slight losses and gains.

Crude oil futures for delivery in February of international referential Brent were trading at $56.87/bbl, up slightly from the $56.67/bblposted in the early hours of Monday.

US referential West Texas Intermediate (WTI) future for delivery in January was trading in European opening at $54.04/bbl, up from the $53.84/bbl posted at 02:05 GMT.

The Monday early gains came on the back of the agreement signed during the weekend by the 13 countries within OPEC and 11 non-OPEC states through which the latter said they would cut crude output by 558,000 bbl/day from 1 January.

By cutting output, oil producers expect prices to rise. The Saturday agreement reached in Vienna followed a previous deal on 30 November among OPEC members themselves by which they committed to cut output by 1.2m bbl/day from 1 January as well.

Asian and Europe stock markets were, however, unfazed by the optimism showed by crude oil traders. Only Japan’s Nikkei closed with gains in Asia, up 0.84% compared to its latest close, while both Hong Kong’s Hang Seng and the Shanghai Composite closed in the red, down 1.44% and 2.47% compared to the close on 9 December.

In Europe, the chemical index was down 0.32% by 09:45 GMT, with only four of its 26 components posting slight gains, while the main region’s stock exchanges were all in the red apart from Italy’s FTSE MIB, up 1.34% by 10:00 GMT compared to its previous close.

Germany’s DAX was losing 0.38% of its value compared to 9 December, while France’s CAC 40, the UK’s FTSE 100 and Spain’s IBEX 35 were all posting small decreases of 0.03%, 0.08% and 0.03% respectively.

“Unsurprisingly the news of a now coordinated agreement has seen oil rally again this morning… While energy stocks are generally outperforming in Asia this morning, it’s still been a much more mixed start to the week,” said analysts at Germany’s Deutsche Bank on Monday morning.

“The Nikkei is leading the way and in the process has bounced back into positive territory for the year, although it has pared back much stronger gains at the open.

“The Hang Seng and Shanghai Comp have weakened however with property names in particular under pressure after the president of one of the largest Chinese property companies painted a bleak view about the prospects for real estate sales in the year ahead,” concluded Deutsche Bank. - ICIS