Oil Prices Climb Further in the International Market

 

Oil prices climbed further on Tuesday, boosting energy companies’ shares, after Russia and Saudi Arabia indicated they could extend an output cut into next year, while the euro struck a six-month dollar high.

 

The world’s top two crude-producing nations raised the idea at the weekend, with a deal agreed between OPEC — of which Saudi Arabia is the key player — and Russia coming to an end in six weeks.

 

The news sent oil prices soaring about two percent on Monday, and a further 0.7 percent on Tuesday, helping energy groups strengthen global stock markets. Share price gains for Royal Dutch Shell and BP on Tuesday helped push London’s benchmark FTSE 100 to a new record high of 7,517.70 points.

 

“Another day, another record high for the FTSE 100,” said Kathleen Brooks from City Index. Volatility was at “extremely low levels and the oil price (continued) to benefit from the OPEC-effect,” she said.

 

Vodafone was the top performer, gaining 4.5 percent, despite registering a 6.1-billion-euros ($6.9-billion) annual loss, as traders focused on the increased dividend and optimistic outlook for next year. But eurozone equity markets — less exposed to commodity-driven stocks — fared less well.

 

Frankfurt added just 0.1 percent and Paris slipped 0.1 percent, despite confirmation that the single currency area’s economic growth in the first quarter was a solid 0.5 percent.

 

Gains in the oil markets come after the commodity was battered earlier this month on worries that the production cut was not enough to make a dent in a worldwide supply glut.

 

On Tuesday the International Energy Agency said supply and demand in the oil market are close to matching up but warned rising US supply could mitigate the OPEC-led production cuts. US stocks opened higher, with the Dow up 0.2 percent to climb back over the 21,000-point mark.