Oil jumps as Chinese equity rally sparks investor optimism
NEW YORK (Bloomberg) -- Crude jumped almost 4% in less than two hours in London as a late-day surge in Shanghai stocks spurs investor optimism across global markets.
Brent futures gained as much as 4.4% from yesterday, reversing a two-day decline, as shares rose globally. West Texas Intermediate oil lagged in New York as the end of the U.S. summer driving season signaled lower demand from American refiners. WTI hasn’t settled since Friday because of the Labor Day holiday on Monday, adding to the divergence between the crude grades.
Brent crude has fluctuated since falling below $45/bbl two weeks ago as concern over China’s slowing demand fueled volatility in global markets. The rally in Shanghai stocks led investors to look past trade data showing China’s exports fell last month.
"The strong close in China has sparked a rebound," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by phone. "The Chinese market is being looked to as a measure of demand."
Brent for October settlement climbed $1.62, or 3.4%, to $49.25/bbl on the London-based ICE Futures Europe exchange at 11:30 a.m. New York time. Prices are down 14% this year.
‘Out of Sequence’
WTI for October delivery fell 28 cents, or 0.6%, to $45.77/bbl on the New York Mercantile Exchange. Monday transactions will be booked with Tuesday’s for settlement purposes.
"Brent and WTI are out of sequence," Bob Yawger, director of the futures division at Mizuho Securities USA in New York, said by phone. "WTI is playing catchup since Brent settled yesterday and WTI didn’t."
Emerging equity markets jumped, European stocks gained for a second day and shares in the U.S. rebounded as trading resumed following the holiday break.
Oil advanced in London as the euro-area economy grew more than initially reported in the second quarter, driven by a surge in exports and consumer spending. Euro-area gross domestic product rose 0.4% in the three months through June after expanding a revised 0.5% in the first quarter, the European Union’s statistics office in Luxembourg said Tuesday.
Market Management
Mexico “expressed readiness to cooperate with OPEC should OPEC decide to enter market management,” Zanganeh said on state television after meeting with Alfonso Navarrete Prida, Mexico’s labor secretary.
OPEC has approved Indonesia’s request to rejoin, IGN Wiratmaja Puja, director-general of oil and gas at the country’s Energy and Mineral Resources Ministry, said in a text message on Tuesday. The country suspended membership in January 2009 after becoming a net oil importer.
October gasoline futures decreased 1.93 cents, or 1.4%, to $1.3989/gal. Diesel for October delivery declined 0.39 cent to $1.5921.
