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Oil boost helps world stocks turn positive

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LONDON: World stocks hit a three-week high on Thursday and turned positive for the year as rising oil prices gave energy firms a shot in the arm that countered the effects of increased political uncertainty. Brent crude futures, the international benchmark for oil prices, hit their strongest since November 2014, at $77.89 per barrel shortly before 07:00 GMT on Thursday, up 0.9 per cent from their last close.


US West Texas Intermediate (WTI) crude futures also marked a November-2014 high, at $71.84 a barrel, before edging back to $71.78 per barrel. That was-still 0.9 per cent above their last settlement.


In China, which is Iran’s single biggest buyer of oil, Shanghai crude futures posted their biggest intra-day rally since their launch in March, rising more than 4.5 per cent to a dollar-denominated record above $75 per barrel.


“Europe and China will not fight against the US sanctions. They will grumble and accept it. There is no one who will realistically choose Iran over the US,” said energy consultancy FGE.


“We believe the previous 1 million bpd limit for exports (imposed during previous sanctions) will be reimposed. As before, it may take several rounds of reductions to reach target levels,” FGE’s founder and chairman Fereidun Fesharaki wrote in a note.


“Oil prices will certainly move up, and $90-100 per barrel prices may again be on the cards,” Fesharaki said.


The dollar meanwhile eased slightly from 2018 highs ahead of US April inflation numbers later on Thursday and as currency markets eyed the Bank of England’s policy meeting and inflation report.


“It’s difficult to know what the principal drivers are given there’s a whole host of events, but it could well be that the effect of oil prices on resources companies is outweighing negatives elsewhere,” said Investec economist Philip Shaw.


“But I think the main thing the market is looking out for is whether growth in the global economy has peaked and is slowing down,” he said, citing reduced growth data in the euro zone and Britain as examples.


Energy shares led Asian stock indexes higher, pushing the 47-country MSCI world equity index to its highest level in three weeks. It is now positive on the year, up 0.3 per cent from its starting level on Jan. 1.


European shares largely took their cues from Asian and US peers and rose, but the gains were tempered as British phone company BT reported disappointing results and the pan European STOXX 600 Index was only marginally higher.


Britain’s FTSE 100 Index was still up on the day ahead of a Bank of England policy meeting at which rates are expected to be kept on hold, a sea change from expectations a few weeks ago, when a hike seemed nailed on.


The New Zealand dollar retreated to a five-month low of $0.6915.


— Reuters


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