Oil hit by scepticism surrounding OPEC deal
Oil prices fell sharply for the second straight session Tuesday on nervousness about the OPEC agreement to cut output.
Global stocks were mixed, with the leading British index hitting a fresh record, the Nikkei falling and the Dow retreating from a march towards 20,000 points.
According to Jack Ablin, chief investment officer at BMO Private Bank, “It looks like investors are taking a step back from risk-taking here”.
US oil benchmark West Texas Intermediate lost $1.14 (£0.94) to end at $50.82 (£41.77) a barrel. Analysts expressed nervousness about the Organization of the Petroleum Exporting Countries production agreement, which is a major support for the commodity.
Iraq’s oil minister said exports from its southern ports reached a record high in December, leading to suspicion it will not stick to the cuts, which went into effect on January 1.
“The crude rally is coming undone because traders got too bullish too fast after the OPEC deal was signed,” analyst Jasper Lawler at London Capital Group said.
London’s benchmark FTSE 100 index finished up 0.5 per cent at a fresh record close as the pound struggled further on Brexit unease.
Frankfurt rose 0.2 per cent, while Paris was flat. In the US, the Dow dipped 0.2 per cent, while the Nasdaq rose 0.5 per cent to finish at a fresh record. Tokyo fell 0.8 per cent as a rebounding yet hit exporters. But the Mexican peso shed 1.6 per cent to 22.00 pesos per dollar, a new historic low in the wake of the election of Donald Trump to US president. Trump has vowed to impose tariffs on companies that ship jobs to Mexico and to rewrite of the North American Free Trade Agreement. The Turkish lira also fell. It recovered only partially from a new low of 3.7871 against the dollar after the central bank intervened to prop up the currency.
Pounded by higher-than-expected inflation and security fears, the lira has been hammered over a warning from ratings agency Moody’s that the slew of attacks in the country were likely to weigh on the economy and squeeze the country’s banks.
It has lost over 20 per cent in value against the dollar over the past three months.