Oil prices rally; S&P 500 up for a fifth session | Reuters - Firstpost
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Oil prices rally; S&P 500 up for a fifth session | Reuters

Updated: Mar 8, 2016 03:45 IST

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NEW YORK Oil prices jumped on Monday as optimism rose that major producers might reach a price support deal, helping U.S. stocks to notch a fifth straight session of gains.

Brent LCOc1 hit its highest level since December, climbing $2.12, or 5.5 percent, to settle at $40.84 a barrel, while U.S. crude CLc1 rose $1.98, or 5.5 percent, to settle at $37.90.

Oil has rallied in recent weeks amid increasing hope that OPEC producers may be moving toward a production freeze to support prices in an oversupplied market. On Monday, the Ecuadorean government said Latin American oil producers agreed to meet on Friday in Quito to coordinate a strategy to support crude oil prices.

"It's more confirmation that oil producers are close to achieving some kind of a deal on price support," said Phil Flynn, analyst at Price Futures Group in Chicago.

"It's feeding bullish sentiment into a market that's turned 180 degrees from where it stood just weeks ago."

In other commodities markets, spot iron ore prices jumped 19 percent, helped by expectations that Chinese steel mills were planning production cuts.

A 2.4 percent gain in the S&P energy index .SPNY offset a decline in technology shares .SPLRCT, leaving the benchmark S&P 500 slightly positive for the session and extending the recent rise in stocks.

The Dow Jones industrial average .DJI gained 67.18 points, or 0.4 percent, to 17,073.95, the S&P 500 .SPX rose 1.77 points, or 0.09 percent, to 2,001.76 and the Nasdaq Composite .IXIC dropped 8.77 points, or 0.19 percent, to 4,708.25.

U.S. stocks have posted gains in each of the last three weeks, thanks in part to the rebound in oil prices, after a steep sell-off at the start of the year.

MSCI's all-country world stock index .MIWD00000PUS edged up 0.03 percent. In Europe, the pan-regional FTSEurofirst 300 index .FTEU3 closed down 0.3 percent.

The dollar fell, wiping out its initial gains, as the oil rally rekindled demand for the euro and commodity-sensitive currencies.

The euro's gains were limited by the view the European Central Bank would embark on more stimulus to support the euro zone's fragile economic recovery at its policy meeting on Thursday.

The euro edged up 0.1 percent against the greenback to $1.1008 EUR= and slipped 0.5 percent versus the yen to 124.75 yen EURJPY=. The dollar index .DXY, which measures the dollar against a basket of six currencies, was down 0.2 percent at 97.132.

In the U.S. bond market, U.S. Treasury prices fell as oil prices surged and as traders increased bets in the wake of the strong February jobs report that the Federal Reserve will raise interest rates this year .

The benchmark 10-year note's yield US10YT=RR rose to 1.920 percent, its highest in just over a month. It was last down 6/32 in price to yield 1.902 percent, up from 1.883 percent late Friday.

(Additional reporting by Barani Krishnan in New York, Nigel Stephenson in London, Hideyuki Sano in Tokyo, Marius Zaharia and Patrick Graham in London; Editing by Nick Zieminski, Bernadette Baum and Dan Grebler)

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

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