Oil prices climb on improving US demand signs, OPEC agrees to meeting date

Members of the Organization of the Petroleum Exporting Countries agreed to meet on July 1. (Reuters)
Updated 20 June 2019
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Oil prices climb on improving US demand signs, OPEC agrees to meeting date

  • After swelling to near two-year highs, US crude stocks fell by 3.1 million barrels last week
  • Members of the OPEC agreed to meet on July 1

TOKYO: Oil prices rose nearly 2 percent on Thursday on signs of improving demand in the United States, the world’s biggest crude consumer, and as OPEC and other producers finally agreed to a date for a meeting to discuss output cuts.
Brent crude futures rose $1.13, or 1.8 percent, to $62.95 a barrel at 0611 GMT. They dropped 0.5 percent on Wednesday.
US West Texas Intermediate (WTI) crude futures were up 90 cents, or 1.7 percent, at $54.66 a barrel. WTI fell 0.26 percent in the previous session.
“It’s a very mixed bag of factors. In the US (oil) demand is likely to be picking up into summer and the OPEC meeting looks like there’s going to be an extension or even more cuts is a possibility,” said Phin Zeibell, senior economist at National Australia Bank.
After swelling to near two-year highs, US crude stocks fell by 3.1 million barrels last week, compared with analyst expectations for a draw of 1.1 million barrels, the Energy Information Administration (EIA) said.
Refined products also posted surprise drawdowns due to a rise as gasoline demand ticked higher on a weekly basis and surged 6.5 percent from a year ago.
Members of the Organization of the Petroleum Exporting Countries (OPEC) agreed to meet on July 1, followed by a meeting with non-OPEC allies on July 2, after weeks of wrangling over dates.
OPEC and its allies will discuss whether to extend a deal on cutting 1.2 million barrels per day of production that runs out this month.
Momentum for an agreement appeared to be building as the United Arab Emirates’ energy minister told Al-Bayan newspaper that an extension is “logical and reasonable.”
Expectations the US Federal Reserve could cut interest rates at its next meeting and confirmation that the chief US trade negotiator will meet his Chinese counterpart before a meeting between President Donald Trump and Chinese President Xi Jinping next week are also supporting markets.
“Fresh stimulus from the largest economies will greatly improve the demand side argument. A positive outcome with the US — China would be icing on the cake,” said Edward Moya, senior market analyst at brokers OANDA.
Tensions remain high in the Middle East after last week’s tanker attacks, which boosted oil prices. Fears of a confrontation between Iran and the United States have mounted, with Washington blaming Tehran, which has denied any role.
In the latest escalation, Iran’s elite Revolutionary Guards have shot down a US “spy” drone in the southern province of Hormozgan, the Guards’ news website Sepah News said on Thursday.
“The geopolitical side is the wild card and can’t be predicted, not just the Iran concerns but also the trade meeting between Trump and Xi,” said Zeibell, adding “we expect to see an improvement in oil prices over the next month or two.”


British mortgage approvals near 2-year high in June: UK Finance

Updated 41 min 43 sec ago
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British mortgage approvals near 2-year high in June: UK Finance

  • Consumer demand has generally been robust since Britain voted to leave the EU in June 2016
  • The number of mortgages approved for house purchase rose to 42,653 in June
LONDON: The number of mortgages approved for British house purchases edged up to one of its highest levels in the past two years last month, though credit card lending grew at a slower pace, data from industry body UK Finance showed on Wednesday.
Consumer demand has generally been robust since Britain voted to leave the European Union in June 2016, but the housing market has slowed, especially in London and surrounding areas.
Bank of England Chief Economist Andy Haldane said on Tuesday that there were signs the slowdown in the housing market had bottomed out.
The number of mortgages approved for house purchase rose to 42,653 in June, on a seasonally-adjusted basis, up from 42,407 in May and close to April’s two-year high of 42,792.
Net credit card lending slowed to £119 million ($148 million) in June from £247 million in May, the lowest since a contraction of £54 million in December 2018.