Oil tops $50 to lift exporters’ currencies

BLOOMBERG

Crude surpassed $50 a barrel for the first time in six months amid signs the global supply glut is coming to an end, buoying currencies where oil is produced. U.S. stocks fluctuated after a two-day rally.
A drop in U.S. stockpiles and shrinking output in Nigeria and Venezuela contributed to the gains in Brent, which is up more than 80 percent from January’s low of $27.10. The Bloomberg Commodity Index touched the highest level since November as metals also advanced. Shares of energy and raw-material producers in the U.S. and Europe advanced. The Norwegian krone led gains in major currencies, while Malaysia’s ringgit was among the best performers in emerging markets.
Brent is recovering after tumbling to a 12-year low in January that helped roil global financial markets and raise concern over the strength of the world economy. Now, the International Energy Agency and Goldman Sachs Group Inc. say a glut is dissipating as low prices take their toll on supplies. That may leave prices high enough to alleviate the threat of deflation and still low enough that they don’t impinge on economic growth. “It could well be that we have arrived at a ‘sweet spot’ — low enough to support consumers and curtail industry job cuts, but not high enough to rile central banks and bond markets.” said Michael Ingram, the London-based market strategist at BGC Partners.

Commodities
Brent crude rose 1.1 percent at $50.29 a barrel at 9:35 a.m. in New York and West Texas Intermediate climbed as high as $50.21. Bloomberg’s index of commodity returns gained as much as 0.9 percent to the highest since Nov. 6.
U.S. inventories slid by 4.23 million barrels last week, exceeding an expected drop of 2 million barrels. Attacks in Nigeria have cut production to a 20-year low and Venezuela is struggling to maintain output amid power cuts. Producers in Canada are beginning to restart oil-sands operations halted by wildfires.
“The shift in sentiment across global markets has been one of the big drivers in the run up from the lows seen in January,” said Norbert Ruecker, head of commodity research at Julius Baer Group Ltd. in Zurich. “The challenge for lots of economies that depend on petrodollars has eased a bit, compared with when oil was at $30, but it’s definitely not gone.”
Copper advanced 0.7 percent to $4,687.5 a metric ton, a third day of gains. The metal used in wires and cables is heading for the first weekly gain this month. Nickel added 0.7 percent and zinc rose 2.4 percent. Gold is set to halt six days of losses as it rebounds from the lowest level in seven weeks.

Stocks
The S&P 500 Index was little changed. The benchmark equity gauge rose to the highest level in a month yesterday amid investor optimism that the economy can withstand higher interest rates from the Federal Reserve. Data today showed U.S. jobless claims fell for a second week, while orders for business equipment unexpectedly declined in April for a third straight month.
Yahoo! Inc. rebounded 2.3 percent, following a 5.2 percent plunge on Wednesday after people familiar with the matter said AT&T Inc. made a bid for the company.
The Stoxx Europe 600 Index fell 0.1 percent after its biggest two-day jump in three months. Miners in the measure headed for their biggest three-day jump in more than a month, with ArcelorMittal, Anglo American Plc, Antofagasta Plc and BHP Billiton Ltd. rising more than 2.7 percent. European banks fell, with Banco Popular Espanol SA tumbling 23 percent after selling new shares. With a 0.4 percent slide, Spain’s benchmark IBEX 35 Index was the biggest decliner among western-European markets.
The Borsa Istanbul 100 Index dropped 0.4 percent amid signs of diminished powers for Deputy Prime Minister Mehmet Simsek in a cabinet reshuffle as President Recep Tayyip Erdogan extended his control of the government. Simsek is the last man standing in a team of officials credited for orchestrating Turkey’s rapid growth years.

Currencies
Higher oil prices supported the Norwegian krone, which rose 1.4 percent versus the greenback, and Malaysia’s ringgit, which advanced 0.5 percent. The MSCI Emerging Markets Currency Index rose 0.7 percent, led by currencies from commodity-producing countries.
Russia’s ruble climbed for a third day, advancing 0.5 percent and South Africa’s rand was up 0.4 percent.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, declined 0.4 percent following a drop in the last session. A measure of volatility in the pound versus the dollar covering the period when the result of the referendum on European Union membership will be known jumped to its highest level in six years. The pound was little changed.

Bonds
Treasuries were little changed before an auction of $28 billion of seven-year notes, having seen strong demand at sales earlier this week.
A gauge of demand at a $34 billion sale of five-year notes Wednesday rose to the highest since 2014 as primary dealers were awarded the lowest percentage at an offering of the securities in data going back to 2003. That came a day after a $26 billion two-year note sale also left dealers with the lowest share on record.
The euro-area’s higher-yielding sovereign bonds declined. Spain’s 10-year yield rose three basis points to 1.49 percent, having slid 10 basis points the previous two days. Yields on similar-maturity Italian debt rose two basis points to 1.37 percent.
Qatar bonds fell after the government raised $9 billion in a debt sale. The yield on bonds due 2022 rose one basis points to the highest in almost two months. The nation sold $3.5 billion in five-year notes, the same amount in 10-year bonds and $2 billion of 30-year paper.