Crude rebounds as Iran positive before OPEC meet

Wellington - Oil climbed as Iran said it has good expectations for a make-or-break OPEC meeting on stabilising the crude market. The dollar advanced toward its best month since May as US yields rose.

Crude bounced off a two-week low reached on Tuesday, when 10 hours of talks failed to resolve differences between oil-producing nations ahead of Wednesday’s formal meeting in Vienna.

Treasuries fell, sending up yields that have already reached the highest relative to global peers since 2007. That spurred gains in the greenback, which is headed for the biggest one-month advance versus the yen since 2009.

European and US stock index futures gained while Singapore’s equities benchmark headed for its longest stretch of gains since 2014.

Most industrial metals extended declines, retreating for a second session after the London Metal Exchange Index reached the highest since May 2015 on Monday.

"The oil market is unlikely to be impressed by any token, face-saving agreement from OPEC,"  said Ric Spooner, chief market analyst in Sydney at CMC Markets.
 
"The substantial increase in OPEC production over recent months will leave the market in a surplus position for some time unless it can agree on significant production cuts.

Momentum continues to fade in a wide range of markets, including stocks, bonds, currencies and base metals."

With the market giving just 30% odds to an agreement to end the oil supply glut, according to Goldman Sachs Group, pessimism regarding the OPEC talks is helping quell a commodities rally sparked by Donald Trump’s surprise presidential victory.

Investors are retreating from some of November’s standout trades as the month comes to a close, with the dollar faltering near a decade high that had been reached as Trump’s win fuelled bets on higher interest rates.

The monthly US payrolls report is due on Friday, after data on Tuesday showed growth last quarter beat forecasts.

Commodities

WTI crude futures added 1.7% to $45.97 a barrel as of 7:06 in London, paring back from Tuesday’s 3.9% tumble; Brent crude rose 1.7% to $47.18 a barrel.

Iran’s oil minister said there were acceptable proposals on the table, but his country would not countenance a freeze or cut based on current levels.

Saudi Arabia has said it is ready to reject an agreement unless all OPEC members - excluding Libya and Nigeria - take part, people familiar with the kingdom’s position said.

Tin and nickel each slumped at least 0.8% while zinc rebounded 0.6% The London Metal Exchange Index tumbled 3.4% on Tuesday, its biggest one-day retreat in more than a year.

Gold for immediate delivery was little changed at 1 188.74 an ounce; it’s down 6.9% since October 31, poised for its worst month since June 2013.

Stocks

Contracts on the Euro Stoxx 50 Index were little changed while those for key indexes in the UK, Germany and France all advanced 0.1%.  Futures on the S&P 500 Index were up 0.1%, after the underlying benchmark rose 0.1% to 2 204.66 on Tuesday.

The MSCI Asia Pacific Index added 0.3% as Singapore’s benchmark gauge climbed for a seventh day, rising 0.7%.

Shares in telecommunications service providers were the biggest gainers in the region, rising 1.1% as a group, followed by technology equities, while materials companies slid 1%.   

Australia’s S&P/ASX 200 Index fell 0.3%, with sub-gauges of raw materials producers and energy stocks down at least 1.9%.

Currencies

Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, climbed 0.1%; it has risen 3.5% since November 24 and hit a decade high last week.

The kiwi and the renminbi each rose 0.3%, paring their declines in the month, while the South African rand, the euro and the Polish zloty retreated at least 0.2%.

Russia’s rouble rose 0.2%. The dollar climbed 0.2% to ¥112.66, adding to Tuesday’s 0.4% increase.

Bonds

The 10-year US Treasury yield rose two basis points to 2.31%; the gap between yields on the Bloomberg Barclays US Treasury Total Return index and those on global bonds climbed to 84 basis points last week, the most since 2007.

German bund yields declined one basis point to 0.21% Australian 10-year yields advanced 2 basis points to 2.72%, while rates for similar-dated New Zealand debt jumped 4 basis points to 3.13%. Japanese yields were unchanged at 0.015%.