Published: Mon, January 14, 2019
Markets | By Otis Pena

Oil down but set for weekly gain amid caution over global economy

Oil down but set for weekly gain amid caution over global economy

Wall Street ended little changed on Friday, taking a breather following a five-day winning streak, while the dollar rebounded against most currencies from earlier losses tied to expectations the USA central bank is in no hurry to raise interest rates. The FTSE 100 index of leading British shares was 0.2 percent lower at 6,930.

"If you want to gauge how investors are viewing the trade talks, just watch tech, and semiconductors in particular", said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on issues including Chinese purchases of US farm and energy commodities.

Gold prices rose on Wednesday, with spot gold XAU= rising 0.49 percent to $1,291.2 per ounce.

Markets are optimistic that the trade-war between Washington and Beijing will be averted.

Adding to support for oil, the value of the US dollar tumbled after a Federal Reserve official said the central bank isn't locked into a particular direction for interest rates.

International Brent crude futures LCOc1 were up 69 cents, or 1.2 per cent, at $59.41 per barrel. They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times a year ago.

With big US banks kicking off the fourth-quarter reporting season next week, investors will comb through earnings reports and projections for signs of a slowdown in economic growth.

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The two countries concluded the latest round of trade talks on Wednesday.

American benchmark West Texas Intermediate (WTI) was at $50.37 a barrel at the same time, seeing a 0.8 percent daily gain, after ending the previous session at $49.99 per barrel.

ANALYST'S TAKE: "While there was agreement on less thorny issues such as agriculture and energy, US demands for verification and enforceable targets on intellectual property rights, transfer of technologies and non-tariff barriers may not be that easily addressed", DBS Group Research strategists Eugene Leow and Neel Gopalakrishnan said in a commentary. Prices surged 5.2% on Wednesday to the highest since December 13.

The rise in the prices is seen as a result of the ability of OPEC to mobilise its members and others not to pump excess oil into the volatile market. Producer prices inched up 0.9 percent from a year ago, far from November's 2.7 percent rise. It added another 23 cents to $52.59 per barrel on Thursday.

Brent crude dropped $1.2 to settle at $60.48 a barrel, a 1.95 per cent loss, while U.S. standard WTI crude fell 1.9 per cent to settle at $51.59 a barrel. WTI increased by 0.56 dollar to settle at 48.52 dollars a barrel, while Brent crude increased by 0.27 dollar to close at 57.33 dollars a barrel.

MSCI's all-country index .MIWD00000PUS climbed 1.03 percent for a fourth day of gains.

The dollar rose to 108.42 yen from 108.28 yen and the euro fell to $1.1500 from $1.1544.

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