Oil prices rally, boosting world stocks | Reuters - Firstpost
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Oil prices rally, boosting world stocks | Reuters

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NEW YORK Oil prices resumed a month-long rally on Wednesday, helping to lift world stock markets, while bond prices weakened ahead of this week's European Central Bank meeting.

Brent moved back above $40 a barrel on speculation the world's largest exporters would agree this month to freeze production and help reduce the largest global build in crude oil in years.

Brent LCOc1 rose $1.42 to settle at $41.07 a barrel, while U.S. crude CLc1 rose $1.79 to settle at $38.29.

U.S. stocks were moderately higher, with gains in the S&P 500 led by a 1.7 percent jump in the S&P energy index .SPNY.

The Dow Jones industrial average .DJI rose 26.2 points, or 0.15 percent, to 16,990.3. The S&P 500 .SPX gained 7.98 points, or 0.4 percent, to 1,987.24 and the Nasdaq Composite .IXIC added 19.90 points, or 0.43 percent, to 4,668.73.

MSCI's all-country world stock index .MIWD00000PUS gained 0.21 percent, while in Europe, the pan-regional FTSEurofirst 300 index .FTEU3 closed 0.45 percent higher.

The biggest weekly draw in U.S. gasoline in almost two years persuaded traders that energy demand was improving despite crude stockpiles at record highs.

The U.S. Energy Information Administration said stockpiles USOILC=ECI rose 3.9 million barrels to nearly 522 million barrels, as predicted by analysts in a Reuters poll.

But gasoline inventories USOILG=ECI fell 4.5 million barrels, much more than the polled number of 1.4 million barrels.

"Gasoline is the star of the show today," said Matt Smith, director of commodity research at New York-based energy data provider ClipperData. "Ongoing strength in demand has yielded a large draw to gasoline inventories despite a rebound in refinery runs."

Traders expect the ECB on Thursday to cut its deposit rate by at least 10 basis points and expand its asset-buying program.

In the bond market, prices of safe-haven government bonds in the United States and Europe US10YT=RR DE10YT=TWEB dipped ahead of the ECB meeting.

The benchmark 10-year note was last down 16/32 in price to yield 1.8900 percent.

With so much priced in, however, some investors are primed for a repeat of the sharp gains in the euro seen in December when the ECB's measures fell short of market expectations.

The euro fell slightly against the dollar at $1.1000 EUR=.

(Additional reporting by Abhiram Nandakumar in Bengaluru; and by Dhara Ranasinghe, Anirban Nag and Amanda Cooper in London; Editing by Nick Zieminski and Meredith Mazzilli)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Mar 10, 2016 02:15 IST

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