Analysts don’t expect the oil party to last for long (Hussein FALEH)

London (AFP) – Oil prices made a spectacular comeback Thursday as fresh US-Iran tensions erupted while equities were slow to build on recent gains as data provided proof of a dire economic fallout from the coronavirus pandemic.

At one point the US crude oil benchmark WTI was up by 20 percent on the day, having earlier this week plunged below zero.

“Heightened risk in the Middle East” triggered the upturn, said Phillip Futures, after US President Donald Trump tweeted he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea”.

Iran, meanwhile, said it put its first military satellite into orbit. Washington alleges the space programme is a cover to develop ballistic missiles.

The tensions offset news of another surge in US crude stockpiles as the pandemic crushes demand for energy.

“Oil prices are enjoying another little bounce on Thursday but don’t be fooled, at these levels, the percentage change can be very misleading,” cautioned Craig Erlam, an analyst at Oanda.

Things were looking up “as the price doesn’t start with a minus”, he said, “but I wouldn’t bet against visiting those depths again”.

– ‘Unprecedented’ collapse –

 

Equity markets posted slight gains on both sides of the Atlantic, but traders were nervous as bad economic news kept pouring in.

The eurozone economy headed by Germany is suffering an “unprecedented” collapse according to a PMI index released Thursday by analysis firm IHS Markit.

The company’s purchasing manager’s index (PMI) dived to a record low in April, confirming private sector gloom that is savaging the 19-nation eurozone.

Markets were not too hopeful as they looked to a meeting of EU leaders who were expected to hammer out a plan to help their economies, but not without much bickering.

In a further sign of the battle ahead for governments, a gauge of Japan’s services sector on Thursday came in at a record low for April and pointed to a deep contraction, while a measure of factory activity dropped to its lowest since the financial crisis 11 years ago.

Data showed South Korea’s economy contracted 1.4 percent in January-February, its worst number since 2008.

– Key figures around 1330 GMT –

West Texas Intermediate: UP 18.5 percent at $16.34 per barrel

Brent North Sea crude: UP 8.4 percent at $22.09

London – FTSE 100: UP 0.4 percent at 5,795.71 points 

Frankfurt – DAX 30: UP 0.2 percent at 10,432.45 

Paris – CAC 40: UP 0.4 percent at 4,429.12 

EURO STOXX 50: UP 0.2 percent at 2,839.40 

New York – Dow: UP 0.3 percent at 23,549.56

Tokyo – Nikkei 225: UP 1.5 percent at 19,429.44 (close)

Hong Kong – Hang Seng: UP 0.4 percent at 23,977.32 (close)

Shanghai – Composite: DOWN 0.2 at 2,838.50 (close)

Euro/dollar: DOWN at $1.0792 from $1.0822 at 2100 GMT 

Dollar/yen: DOWN at 107.66 yen from 107.71 

Pound/dollar: UP at $1.2334 from $1.2320 

Euro/pound: DOWN at 87.47 pence from 87.82

burs-jh/bsp 

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.