NEW YORK: Oil prices resumed their decline yesterday after rallying the previous session, while world stock markets edged higher as investors snapped up beaten-down energy shares.
A bounce in oil prices on Monday from five-year lows helped foster a broadly more positive tone in Asia, but both Brent and US crude oil were down more than 1 percent in midday US trading yesterday. Brent crude oil is down more than 30 percent since June.
US stocks were higher, led by gains in energy as investors picked up shares in the sector after heavy recent losses. The S&P energy index, which has fallen sharply with oil prices and is down about 14 percent since June, rose 1.4 percent. “Valuations have gotten pummelled under the weight of declining crude prices, and it looks like investors are starting to nibble at the space,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Brent crude was last down 99 cents at $71.55 a barrel, while U.S. crude oil was down $1.12 at $67.88.
Beyond the plunge in oil is a deeper debate about whether some developed economies are slipping into a prolonged period of stagnation, or just coming out of the financial crises of the past five years more slowly than previously hoped.IMF Managing Director Christine Lagarde said cheaper oil was a positive for the global economy.
The drop has given a boost to travel companies and should have a positive impact on consumer spending. The dollar rose to a 4 1/2-year high, supported by a retreat in oil prices that has helped to lift it against commodity-linked currencies. Reuters
