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US oil prices slide below $70 a barrel; mixed day for global stocks

By AFP - Dec 07,2023 - Last updated at Dec 07,2023

The WTI oil contract fell below $70 per barrel for the first time since July (AFP photo)

NEW YORK — US oil prices finished below $70 a barrel for the first time since July on Thursday on a mixed day for global equities, as traders pondered hopes for interest rate cuts from the European Central Bank and the US Federal Reserve.

West Texas Intermediate oil for delivery in January fell 4.1 percent to finish at $69.38 a barrel. The drop came as markets eyed signs of weakening demand amid skepticism that the OPEC + coalition's efforts will meaningfully restrain supply.

Analysts have begun to consider the possibility that Saudi Arabia could abruptly decide to open the spigots, recalling a move by the kingdom in 2014 to counter rising US production.

"There's increasing fears that the Saudis will just let loose with supply. They have a lot of spare capacity now because of how much they've cut back production wise," said John Kilduff of Again Capital. "So it's another bearish factor for the market."

Frankfurt's DAX stocks index hit a fresh record high, passing the 16,600 level for the first time, and in Paris the CAC 40 rose as sliding German factory orders added to hopes of an interest-rate reduction from the European Central Bank (ECB).

"Risk-on sentiment is driving price action this morning amid growing expectations that the European Central Bank could cut rates early next year," said Victoria Scholar, head of investment at trading firm Interactive Investor.

"Markets are pricing in an almost 90 per cent chance of a cut from the ECB in the first quarter of 2024."

Equity investors digested additional data pointing to a softening US labour market, rekindling hopes of a Fed rate reduction.

Following Tuesday's below-forecast job openings data, on Wednesday jobs data from payrolls firm ADP also came in softer than expected, and trade data showed a considerable drop in exports.

 

Markets rallied in November on growing hope that with inflation continuing to fall and other parts of the economy easing, the Fed will be able to slash rates in 2024, with some suggesting as soon as the first quarter.

But US markets had another downcast session on Wednesday, with all three major indices retreating.

Asia enjoyed some much-needed buying, with Tokyo up two percent and Sydney 1 per cent higher.

Hong Kong, Sydney, Singapore, Seoul, Bangkok, Mumbai, Wellington, Taipei and Jakarta were also on the rise.

Shanghai fell, with sentiment dented after Moody's on Tuesday warned it had downgraded its outlook for China's credit rating owing to the country's rising debt levels and concerns over its battered property sector.

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