Reuters Insider - Inside the News: Wall St to Open Higher, Oil to Test $100?

EPI (Holdings)

13/06/2016 11:03

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        U.S. stock futures signal a higher open as Europe 
                     extends its rally. Markets await the U.S. 7-year  
                     auction and oil retreats from 2 year highs. Energy 
                     reporter Barbara Lewis asks how high oil can go.  
 
 
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Transcript (May be auto-generated)

                 1330 GMT. US stocks futures signal a higher open on Wall Street and European 
shares extend their yearend rally but only just. Treasury yields spiking higher 
again in the wake of yesterday's selloff which followed a dismally received 
5-year auction. Today's $29 billion sale of 7-years very much in focus. European
shares inching ahead. Meanwhile, Total among the top gainers as oil prices hover
near 2-year highs. The benchmark Eurofirst 300 on track for its biggest monthly 
gain since March. The index has now clawed back 76% of its losses since its 
lifetime low in March '09. And LME Copper hitting a record high of $9,447 a ton 
as trade resumes after the Christmas break. The rise fueled by worries about 
supply from Chile. The Euro is steady, German inflation coming in at a 
preliminary rate of 1% month on month in December. That is the biggest monthly 
increase for six years. The Aussie-Dollar making all the running on the FX 
markets, not far off the 28-year peak it hit in November thanks to higher 
commodity prices. Reuters FX Analyst Neal Kimberley says there's no fundamental 
reason to sell the Aussie. The rarest they've got, agricultural prices are 
through the roof. The Australian supply that. The copper price today through the
roof. The Australian supply that. The zinc price, precious metals, you name it, 
what people want, the Aussie's produced. And if you're a hedge fund manager or 
you're a real money guy and you're looking at where you're gonna park your 
money, you have to take a second look at the Aussie even if it's at $101 and 
really in your heart of hearts you're thinking I'd rather sell it up here but 
actually I'm gonna have to buy some. Oil prices retreating from 26-month highs 
but US inventory out later could change that. A Reuters poll of eight analysts 
suggest crude stockpiles falling by 2.9 million barrels. 

With me, Energy Correspondent Barbara Lewis. Barbara, I wanna talk generally 
about why OPEC? Why you think OPEC or the market thinks OPEC is not prepared to 
act? They've always said $70 to $80 is fair but we're looking to get to a $100 
pretty quickly. Well, he knows but it's possible. I think OPEC doesn't see why 
it should do anything because it doesn't necessarily think that the rally is 
driven by fundamentals of supply and demand. They think it's a speculative 
element. Okay. But if $70 to $80 is fair, why aren't they doing anything? 

Well they could argue that doing something wouldn't make any difference because 
it would just add more oil to a market that already has enough oil. It might do 
something psychologically because it would tell the market that OPEC is 
concerned. But OPEC equally could be concerned about the downside. If it adds 
too much oil, that could pressure prices. EIA tomorrow, EPI today. Is that gonna
make any difference? It could briefly but again the question is whether any fall
that we see is a genuine fall in stocks because there's a yearend tax 
phenomenon. If you can get your stock levels below the level of a year ago, then
you reduce your tax. So there could be a distortion. 

When's the market say we're gonna get to a $100? I think and other people are 
thinking we could get there quite soon. It's a target that's in sight but you 
know, who knows? As OPEC says, there's a lot of uncertainty out there. Alright 
Barbara, many thanks. Barbara Lewis. US stock futures just to finish up with 
trading in Europe, pointing to gains at the open on Wall Street. China's 35% cut
to rare earth exports, one cause for concern though Apple among others has been 
scrambling to source the minerals outside of China which produces some 97% of 
the global supply. The move is a worry for high-techs and automakers and could 
prompt US action at the World Trade Organization. Looking ahead to tomorrow, US 
EIA data as we said likely to impact on oil prices. Data include French producer
prices, Italian business confidence, Greek retail sales and US initial jobless 
claims. And HSBC's estimate of Chinese industrial output in December will be 
closely watched as well. Coming up on Insider, special program looking at the 
turmoil in the Ivory Coast and the implications for cocoa prices. That's coming 
up at 1345 GMT. I'm Axel Threlfall. This is Reuters