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Westlake Legal Group > Posts tagged "Futures and Options Trading"

What the Negative Price of Oil Is Telling Us

ImageWestlake Legal Group merlin_170348118_a59bae99-a3c0-434d-a675-c6ef1ab81822-articleLarge What the Negative Price of Oil Is Telling Us Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline Futures and Options Trading Economic Conditions and Trends Coronavirus (2019-nCoV) Chicago Mercantile Exchange
Credit…Nick Oxford/Reuters

The coronavirus pandemic has caused a series of mind-bending distortions across world financial markets, but Monday featured the most bizarre one yet: The benchmark price for crude oil in the United States fell to negative $37.63.

That means that if you happened to be in a position to take delivery of 1,000 barrels of oil in Cushing, Okla., in the month of May — the quantity quoted in the relevant futures contract — you could have been paid a cool $37,630 to do so. (That is about five tanker trucks’ worth, so any joke about storing the oil in your basement will have to remain just that.)

There are two ways of looking at this. First is what happened in a technical sense. The collapse of the May futures contract for West Texas Intermediate crude oil shows how the shock of the crisis is rippling through all sorts of markets and making them behave strangely.

But the broader takeaway is that the Covid-19 crisis is an extraordinary deflationary shock to the economy, causing the idling of a vast share of the world’s productive resources. Don’t let shortages of a few goods, like face masks or toilet paper, confuse the matter. The consequences will almost surely persist beyond the period of widespread lockdowns.

When you read a news article or hear an economist mention the price of oil, it typically refers not to a physical barrel filled with viscous liquid but to the price of a futures contract that trades on the Chicago Mercantile Exchange. By convention, the “price of oil” is the going per-barrel price reflected in a futures contract for the ensuing month.

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In the case of the most widely followed contract in the United States, that would be West Texas Intermediate crude, which you would need to physically obtain from storage facilities in Cushing, Okla., where major pipelines intersect.

Plenty of major entities trade such futures without ever thinking too much about those physical details — and certainly without getting any oil on their expensive suits. Speculators speculate, companies hedge their risks of price swings, and transactions take place at the level of abstraction on a computer screen.

But as each contract’s settlement date approaches, the financial speculators sell their contracts to “real” buyers of oil, like refineries. This can cause problems for traders who may be in over their heads. Chris Arnade, a trader-turned-author, said on Twitter on Monday that he once found himself in that position: “I ended up almost taking physical delivery of lots of oil.”

Tuesday is the settlement day for that May contract. It fell from $18.27 at Friday’s close to the steeply negative numbers late Monday amid a frantic effort by traders to offload oil for which there simply wasn’t enough physical demand or storage capacity.

Over the last six weeks, demand for products refined from oil has collapsed. With far fewer airplanes flying, airlines need less jet fuel. People aren’t driving, so they need less gasoline.

But oil producers have been slower to cut back production, meaning there is a glut. All the usual places to store it are full, and hence the negative futures prices to enable the market to clear. There are only so many storage tanks.

Futures prices suggest that the oil market will work through this, as drillers suspend production. The June futures contract was trading for $21.41 late Monday, and the September contract for over $30. Commodities traders call it a state of “super contango,” with sharply higher prices in the near future than today.

The economic result of the pandemic is, more than anything, a sudden stop of demand. There may be a few products in which shortages are an issue, including medical equipment, personal protective gear and disinfectant wipes. But the overall picture is that a huge share of potential economic output is simply on hold.

That includes obvious candidates like restaurants, airlines and sports arenas, which are sitting empty. It includes the 22 million workers who have filed for unemployment insurance benefits, with many more likely to come. It includes less obvious candidates like the auto industry, which has temporarily shuttered factories. And, we now see, it includes the energy industry, with more capacity to pump oil out of the ground than there is demand for at present, and inadequate storage capacity.

All of that points to a deflationary collapse — a glut of supply of goods and services, and consequently falling prices — that surpasses anything seen in most people’s lifetimes.

Oil isn’t the only commodity with a plunging price. Corn futures have fallen 19 percent since early February. The price of inflation-protected government bonds suggests inflation will be only 0.56 percent a year over the coming five years, and the Consumer Price Index fell 0.4 percent in March.

The good news is that capacity won’t go away overnight. The oil will still be in the ground once the economy starts to recover; the unemployed will be eager to go back to work; the stadiums and restaurants can reopen. But the longer the freeze of the economy continues, the deeper the risks of some permanent damage.

In the oil market, even assuming the negative prices for the May futures contract can be viewed as a bizarre aberration, there is a deeper lesson. A steep rise in American energy production over the last decade has outpaced the world’s need for energy, especially if many of the changes resulting from the pandemic, like less air travel, persist for months or years.

Economics is about supply and demand, production and consumption. The question for the post-pandemic economy is whether that balance, once lost, can be quickly restored. Doing so will be a lot more complicated than finding more places to store West Texas Intermediate crude.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing

Westlake Legal Group too-much-oil-how-a-barrel-came-to-be-worth-less-than-nothing Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing Strategic Petroleum Reserve (US) Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline Layoffs and Job Reductions Futures and Options Trading
Westlake Legal Group 20virus-oil-facebookJumbo Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing Strategic Petroleum Reserve (US) Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline Layoffs and Job Reductions Futures and Options Trading

Something bizarre happened in the oil markets on Monday: Prices fell so much that some traders paid buyers to take oil off their hands.

The price of the main U.S. oil benchmark fell more than $50 a barrel to end the day about $30 below zero. This is the first time oil prices have turned negative, and while nobody expects them to stay so low, it says a lot about the disarray in the oil industry as the coronavirus pandemic decimates the world economy.

At the start of the year, oil sold for over $60 a barrel but by Friday it hit about $20.

Demand for oil is collapsing, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world is running out of places to put all the oil the industry keeps pumping out.

Prices went negative — meaning that anyone trying to sell a barrel would have to pay a buyer $30 — in part because of the way oil is traded. Futures contracts that require buyers to take possession of oil in May are expiring on Tuesday, and nobody wanted the oil because there was no place to store it. Contracts for June delivery were still trading for about $22 a barrel, down 16 percent for the day.

“If you are a producer, your market has disappeared and if you don’t have access to storage you are out of luck,” said Aaron Brady, vice president for energy oil market services at IHS Markit, a research and consulting firm. “The system is seizing up.”

Refineries are unwilling to turn oil into gasoline, diesel and other products because so few people are commuting or taking airplane flights, and international trade has slowed sharply. Oil is already being stored on barges out at sea and in any nook and cranny companies can find. One of the better parts of the oil business these days is owning storage tankers.

“Traders have sent prices up and down on speculation, hopes, tweets and wishful thinking,” said Louise Dickson, an oil markets analyst at Rystad Energy, a research and consulting firm. “But now reality is sinking in.”

The world has an estimated storage capacity for 6.8 billion barrels, and nearly 60 percent is filled, according to energy experts.

Some of the oil glut is seen in Cushing, Okla., a critical storage hub where the oil that trades on the U.S. futures market is delivered. With a capacity to hold 80 million barrels of oil, Cushing has only 21 million barrels of free storage left, according to Rystad Energy, or less than two days of American production. As recently as February, Cushing was not even up to 50 percent. Now, oil experts say it will be filled to the brim in May.

Storage is almost completely filled in the Caribbean and South Africa, and Angola, Brazil and Nigeria may run out of warehousing capacity within days.

In his news briefing on Monday, President Trump said the government was “looking to put as much as 75 million barrels” into the Strategic Petroleum Reserve, which is used as a buffer during crises and was created after the 1973-1974 oil embargo.

The reserve has about 635 million barrels of oil, and is equipped to store 75 million barrels more. That would be equivalent to three-quarters of one day’s global output. But the reserve can take only about 500,000 barrels a day, or slightly less than 4 percent of U.S. domestic production.

Congressional Democrats had recently balked when the administration proposed spending $3 billion to fill the reserve as part of the stimulus package lawmakers passed last month. But on Monday Representative Lizzie Fletcher, a Houston Democrat, said she would introduce legislation appropriating funds for a reserve purchase.

But it will be hard to quickly fix the oil industry’s problems. The oil infrastructure is complicated and it’s not easy to turn off the taps. In addition, countries like Saudi Arabia and Russia only reluctantly cut production because oil powers their economies.

Shutting down oil wells and then restarting them when demand returns is a process that sometimes requires expensive manpower and equipment. Fields do not always recover their former production. In addition, some companies must keep producing oil in order to pay interest on their debts and stay alive, so they might keep pumping even if they are losing money.

The huge drop in prices was also exaggerated by a quirk in the way oil prices are set.

When traders sell oil they guarantee to deliver it at a future time. Normally the price differences between oil for next month and the following one are relatively minor. But on Monday oil to be delivered next month, or May, was essentially deemed worthless. Oil set for delivery in June also fell but not nearly as much — more reflective of the market’s view on what the value of crude is right now.

Brent crude, the oil price benchmark outside the United States used by much of the world, whose May contract has already expired, fell about 5 percent to a little under $27 a barrel.

The disparities showed a market “undergoing extreme stress,” said Antoine Halff, a founding partner of Kayrros, a research firm. “It’s a sign of the very real imbalance between supply and demand.”

A little over a week ago, there was some optimism in the oil industry. The Organization of the Petroleum Exporting Countries, Russia and other producers said they would cut 9.7 million barrels a day of production, or about 10 percent of global oil output, the largest cut ever. It was a grim acknowledgment that global demand had collapsed.

But that record cut will not be nearly enough. Analysts expect daily oil consumption to fall by as much as 29 million barrels in April, about three times the cuts pledged by OPEC and its allies, and May isn’t expected to be much different.

“It’s relatively impressive in terms of the overall number, but it’s not enough to tighten the market between now and the fourth quarter of 2020,” David Fyfe, chief economist at Argus Media, a commodities pricing firm, said about the cut by OPEC and its partners.

U.S. oil producers are also reducing production, but not rapidly enough. At the current pace, American production will decline from 13.3 million barrels a day at the end of 2019 to less than 11 million barrels a day by the end of the year.

Many companies are already reporting substantial losses, and experts said businesses across the oil patch will have to seek bankruptcy protection in the coming months.

Halliburton, the giant provider of equipment, workers and services to oil companies, on Monday reported a $1 billion loss in the first quarter in contrast to net income of $152 million in the same period a year earlier.

Gary Ross, chief executive of Black Gold investors, an oil trading firm, said demand was falling so fast that U.S. companies that recently were exporting oil are now cutting production.

“It doesn’t matter whether it is $15, $10 or $8, you are still going to” stop production, Mr. Ross said. ConocoPhillips, one of the largest U.S. oil companies, said last Thursday that it would temporarily curtail about 225,000 barrels a day of production.

Such cuts should help stabilize the markets, but it might take months. The U.S. contract for oil delivered in May 2021 was trading on Monday at about $35 a barrel, hinting at how long it might take for prices to reach levels they were at just a few weeks ago.

The oil industry’s plight is forcing policymakers to consider intervening more forcefully.

And on Tuesday, the Texas Railroad Commission will take up a proposal for a 20 percent statewide production cut on Tuesday. The commission used to regularly manage oil production but hasn’t done so since the early 1970s.

Exxon Mobil and other large companies have opposed mandated cuts but some smaller companies want the commission to force the industry to cut production.

Scott Sheffield, chief executive of Pioneer Natural Resources, told the commission at a hearing last week that if the oil price stayed around $20 a barrel for a while, 80 percent of the hundreds of independent oil companies in the state would be forced into bankruptcy and 250,000 workers would lose their jobs.

At $30 a barrel, many companies would be “crippled,” Mr. Sheffield said. “But at least the industry will survive.”

Katie Rogers contributed reporting.

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Global Stocks Continue to Slide on Coronavirus Concerns

Westlake Legal Group 27MARKETS2-facebookJumbo Global Stocks Continue to Slide on Coronavirus Concerns Stocks and Bonds Government Bonds Futures and Options Trading Coronavirus (2019-nCoV)

Futures on Wall Street on Thursday pointed to a sixth straight day of losses as the impact from the coronavirus outbreaks continued to scare investors.

Financial markets continued their declines in Asia and Europe.

Here’s the latest:

  • In Europe, the FTSE 100 in Britain, the CAC 40 in France and the DAX in Germany were all trading more than 2.5 percent lower.

  • In Asia, stocks in Japan fell more than 2 percent. Shares in China bucked the general trend, with Shanghai rising 0.1 percent.

  • Oil prices also fell, with the price of the international benchmark, Brent crude, dropping more than 2 percent. The price of gold rose, signaling continued nervousness among global investors.

  • Investors looking for safer places to put money have piled into government bonds, pushing the yield on the 10-year Treasury note to record lows.

  • The outbreak has taken a toll on multinational companies. Microsoft on Wednesday said its sales in the current quarter would be lower because of a disruption to its supply chain. On Thursday, Anheuser-Busch InBev joined the chorus, as the brewer forecast a steep drop in quarterly profit.

  • Companies have also scaled back their travel. The French cosmetics giant L’Oreal suspended all business travel for its 80,000 employees until the end of March. Nestlé, the giant Swiss-based food company, said it would suspend all international business trips for its 290,000 workers until mid-March.

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Stocks Have Worst Day Since October Over Coronavirus Worries

Westlake Legal Group 27markets1-facebookJumbo Stocks Have Worst Day Since October Over Coronavirus Worries Stocks and Bonds Standard&Poor's 500-Stock Index Oil (Petroleum) and Gasoline Futures and Options Trading Coronavirus (2019-nCoV)

Just as the world economy appeared to emerge from the uncertainty of the trade war, the spread of the dangerous coronavirus in China has pierced the calm that had settled over financial markets.

The S&P 500 closed down 1.6 percent on Monday — its second straight drop, which wiped out much of the market’s gains since the start of the year, and its sharpest decline since Oct. 2, when the trade war was stoking fears of a domestic slowdown.

President Trump announced the “Phase 1” trade agreement with China on Oct. 11, contributing to weeks of placid trading that pushed stocks to a series of records, making the coronavirus-driven slump all the more jarring.

“There was already reason to question whether markets were a bit too buoyant,” said Patrick Chovanec, chief strategist at the investment advisory firm Silvercrest Asset Management. “Sometimes it takes something like this to refocus their attention on potential downsides.”

Stocks with close ties to the Chinese market or the travel industry — or both — bore the brunt of the selling.

American Airlines fell more than 5 percent, and Wynn Resorts, which operates casinos in Macau, a special administrative region of China and a gambling haven for Chinese high rollers, tumbled 8 percent.

Companies with links to China’s key role in the global technology supply chain also slumped.

IPG Photonics, which makes lasers for cutting and welding and gets 40 percent of its sales in China, fell more than 6 percent. Two chip makers, Applied Materials and Skyworks Solutions, which sells heavily in the Chinese market, each fell more than 4 percent.

The S&P’s drop followed declines of more than 2 percent for the major stock benchmarks in Europe. The benchmark Nikkei 225 index in Tokyo also sank 2 percent, while many other markets in Asia — including the Shanghai Stock Exchange — were closed for the Lunar New Year.

China extended the Lunar New Year holiday by three days until Feb. 2 in an effort to limit travel and contain the outbreak that started in the city of Wuhan. Nearly 3,000 people, mostly in China, have contracted the disease and at least 80 have died. Five cases have been confirmed in the United States.

Concerns about travel restrictions — the Chinese government has effectively sealed off Wuhan and other cities, affecting 56 million people — helped push down oil prices and shares of major oil companies.

Brent crude, the international benchmark, slipped below $60 a barrel, its lowest since October. Prices have declined about 10 percent since Jan. 17, when China confirmed multiple deaths from the virus. On Monday, the S&P 500 energy sector was down 2.8 percent.

The outbreak has come at a crucial period for Chinese business, which could complicate official plans to reinvigorate growth in the aftermath of the trade-war tensions of the last two years.

The country’s economy, trying to shrug off its worst slowdown in nearly three decades, is already hurting from the virus’s effects on travel and tourism. And consumer spending — which helps fuel the economy over the holiday period — could be dampened as more residents stay home.

The outbreak has China’s leaders under pressure, and some experts have expressed concerns that the government was too slow to respond and could even make the situation worse.

The sheer size of the Chinese economy, the second largest in the world after that of the United States, makes any upheaval there a serious factor in the pace of global economic growth. Creeping doubts among investors have already helped drive down bond yields in recent weeks. And on Monday, the yield on the 10-year Treasury note, considered a gauge of investor expectations for economic growth and inflation, sank to 1.60 percent, the lowest level of the year.

But as long as the spread of the virus remains contained, the economic implications should not be dire for the United States.

The American economy is relatively insulated from trade, and the important consumer sector continues to show signs of strength. Unemployment remains near 50-year lows and economic growth, while relatively slow, is steady. Inflation and interest rates are low, with signs that those low rates are finally starting filter through to the broader economy.

With rates on 30-year fixed mortgages below 4 percent, housing has recently picked up the pace. Sales of previously built homes are at their highest level since early 2018. Homebuilders are reporting strong demand for more affordable offerings.

On Monday, D.R. Horton — the largest American homebuilder by house closings — reported better-than-expected earnings and revenue for the first quarter, sending its shares up more than 2 percent. Lennar, the second-largest builder, reported similarly bright numbers earlier this month.

“Across all of our geographies, we’re feeling pretty good about the traffic, pretty good about the demand in the most recent quarter,” Bill Wheat, chief financial officer of D.R. Horton, said on a conference call with analysts.

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Stocks Fall as Dangerous Coronavirus Spreads

Westlake Legal Group 27markets1-facebookJumbo Stocks Fall as Dangerous Coronavirus Spreads Stocks and Bonds Standard&Poor's 500-Stock Index Oil (Petroleum) and Gasoline Futures and Options Trading Coronavirus (2019-nCoV)

Stocks and oil prices tumbled on Monday, as the spread of a dangerous virus in China raised investor worries about the global economy, just as it was beginning to emerge from a cloud of uncertainty related to the trade war.

The sudden appearance of the coronavirus, which has killed at least 80 people in China and infected others around the globe, pierced a calm that had settled over financial markets in recent months.

The S&P 500 dropped more than 1.5 percent in early trading, which would be its worst loss of the year and the steepest fall since early October.

Stocks with close ties to the Chinese market or the travel industry — or both — bore the brunt of the selling. American Airlines fell more than 4 percent in early trading, and Wynn Resorts, which operates casinos in Macau, a special administrative region of China and a gambling haven for Chinese high rollers, tumbled more than 9 percent.

The selling followed declines of more than 2 percent for the major stock benchmarks in Europe. Tokyo’s benchmark Nikkei 225 index also sank 2 percent, while many other markets in Asia — including the Shanghai Stock Exchange — were closed for the Lunar New Year.

China extended the Lunar New Year holiday by three days until Feb. 2 in an effort to limit travel and contain the outbreak that started in the city of Wuhan. Nearly 3,000 people, mostly in China, have contracted the disease. Five cases have been confirmed in the United States.

Concerns about travel restrictions — the Chinese government has effectively sealed off Wuhan and other cities, affecting 56 million people — helped push down oil prices and shares of major oil companies. Brent crude, the international benchmark, slipped below $60 a barrel, its lowest since October.

The arrival of the outbreak at a crucial period for Chinese business could complicate official plans to reinvigorate growth in the world’s second-largest economy in the aftermath of the trade-war tensions of the last two years.

The country’s economy, trying to shrug off its worst slowdown in nearly three decades, is already hurting from the impact on travel and tourism. And consumer spending — which helps fuel the economy over the holiday period — could be dampened as more residents stay home.

The outbreak has China’s leaders under pressure, and some experts have expressed concerns have that the government was too slow to respond and could even make the situation worse.

The sheer size of the Chinese economy makes any upheaval there a serious factor in the pace of worldwide economic growth. Creeping doubts among investors have already helped drive down bond yields in recent weeks. And on Monday, the yield on the 10-year Treasury note, considered a gauge of investor expectations for economic growth and inflation, sank to 1.61 percent, the lowest level of the year.

But as long as the spread of the virus remains contained, the economic implications shouldn’t be dire for the United States.

The American economy is relatively insulated from trade, and the important consumer sector is showing signs of ongoing strength. Unemployment remains near 50-year lows and economic growth, while relatively slow, is steady. Inflation and interest rates are low, with signs that those low rates are finally starting filter through to the broader economy.

With rates on 30-year fixed mortgages below 4 percent, housing has recently picked up the pace. Sales of previously built homes are at their highest level since early 2018. Home builders are reporting strong demand for more affordable offerings.

On Monday, D.R. Horton — the largest American homebuilder, by house closings — reported better-than-expected earnings and revenue numbers for the first quarter. Lennar, the second-largest builder, reported similarly bright numbers earlier this month.

“We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid,” said Donald R. Horton, chairman of the board at D.R. Horton, in a statement announcing the company’s results.

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Global Stocks Fall as Dangerous Coronavirus Spreads

Westlake Legal Group 27markets-facebookJumbo Global Stocks Fall as Dangerous Coronavirus Spreads Stocks and Bonds Standard&Poor's 500-Stock Index Oil (Petroleum) and Gasoline Futures and Options Trading Coronavirus (2019-nCoV)

Stocks tumbled on Monday and oil prices fell, as the spread of a dangerous virus in China raised investor worries about the global economy.

The sudden appearance of the coronavirus, which has now killed at least 80 people in China and infected others in Europe and the United States, among other countries, has shattered a calm that had settled over financial markets in recent months.

Nearly 3,000 people, mostly in China, have now contracted the disease. China extended the Lunar New Year holiday by three days in an effort to limit travel and contain the outbreak that started in the city of Wuhan. On Sunday, a fifth case of the disease was confirmed in the United States.

Concerns about the virus were evident on Wall Street on Friday, with shares of airlines and companies dependent on tourism from China particularly hard hit. The S&P 500 declined 0.9 percent, the worst drop for the index since early October.

On Monday, that selling accelerated. Major stock benchmarks in Europe were down more than 2 percent. While many markets in Asia were closed for Lunar New Year, Tokyo’s benchmark Nikkei 225 index sank 2 percent.

Trading in U.S. stock futures indicated that shares on Wall Street would also open lower. Travel-related stocks, including airlines, were among the worst performers in premarket trading.

Oil prices dropped. Brent crude, the international benchmark, slipped below $60 a barrel, its lowest since October.

China’s leaders are under pressure as the epidemic spreads at an accelerating rate. Concerns have been raised that the government’s response to the outbreak, which includes a lockdown of cities that affects 56 million people, is too late and could even make the situation worse.

The country’s economy, trying to shrug off its worst slowdown in nearly three decades, is already hurting from the impact on travel and tourism. There are fears the virus will further dampen the consumer spending that fuels the economy as more residents stay home over the Lunar New Year.

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Markets Recoil, and Then Rally, as Traders Absorb Iran Attack

Westlake Legal Group 08markets1-alt-facebookJumbo Markets Recoil, and Then Rally, as Traders Absorb Iran Attack United States Defense and Military Forces Stocks and Bonds Politics and Government Oil (Petroleum) and Gasoline Iraq Iran International Relations Futures and Options Trading Defense and Military Forces

Investors signaled their relief on Wednesday after President Trump backed away from further confrontation with Iran, a day after Iranian missile strikes on American positions in Iraq.

Stocks in the United States climbed to new highs shortly after the conclusion of the president’s speech, in which he said the strikes produced no American casualties and that Iran now “appears to be standing down.”

Oil prices, which had spiked after the missile attacks Tuesday night and fallen early Wednesday, fell further after the televised address. Brent crude, the international benchmark, and West Texas intermediate, were down more than 3.5 percent and 4 percent shortly after midday.

At the same time, the S&P 500 was up more roughly 0.7 percent to nearly 3,260. If the market holds that level until the end of the trading day, it would be a record, overtaking the previous high-water mark set on Jan. 2.

The rise was driven in part by fuel-sensitive sectors of the market, which benefit when crude prices decline. Airline stocks jumped, with Delta up more than 2.5 percent shortly after midday. Alaska Air and American Airlines were up both up about 2 percent.

Safe havens such as Treasury bonds and gold — markets where investors typically seek shelter during times of crisis — also reflected the easing tension.

Even before Mr. Trump’s statement, the nervousness in financial markets eased after Iran’s foreign minister suggested that he was ready to stand down for now and President Trump suggested the damage from the attack had been limited, raising hopes of a restrained conflict in a region critical to world oil supplies.

Brent crude jumped about 5 percent overnight to as high as $71.75 a barrel, immediately after news of the Iranian missile attack. But within hours it had fallen back sharply.

West Texas intermediate crude also jumped and then receded, and was trading at about $62.95 a barrel by Wednesday afternoon, about 0.2 percent lower from Tuesday.

In stock trading, Britain’s FTSE 100 was unchanged, while Germany’s DAX rose about 0.7 percent. In Asia, Hong Kong’s Hang Seng ended the day 0.8 percent lower, and Japan’s Nikkei fell 1.6 percent.

Mohammad Javad Zarif, Iran’s foreign minister, said in a tweet that the nation had “concluded proportionate measures in self-defense.” The statement followed two missile attacks on bases in Iraq housing American forces in response to the killing last week of Maj. Gen. Qassim Suleimani.

In his own tweet shortly after, Mr. Trump suggested that damages and casualties sustained by American forces had been minimal, though the assessment was continuing. “All is well!” he said on Twitter.

The risk of a war between the United States and Iran, in the world’s most important oil-producing region, the Persian Gulf, has sent shudders through the oil markets in recent days. The fear is that an attack on shipping from the Gulf, or damage to the oil fields of a major producer in the area like Iraq or Saudi Arabia, could restrict global supplies.

On Wednesday, officials from the Organization of the Petroleum Exporting Countries, the producers’ group, sought to calm fears that the crisis could lead to a major disruption in supplies.

“We are not forecasting any shortage of supply unless there is a catastrophic escalation, which we don’t see,” Suhail Mohamed Faraj al-Mazrouei, the oil minister of the United Arab Emirates, told reporters in Abu Dhabi on Wednesday, Reuters reported.

Markets have become so accustomed to a surplus of oil in the global market that they are not as worried about tensions in the Persian Gulf region as they once were.

“Oil has become a broken barometer for gauging Middle East tensions,” Helima Croft, head of global commodity strategy at RBC Capital Markets, an investment bank, said on Tuesday. “It now only reacts after something seismic happens.”

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Markets Recoil, and Then Ease, as Traders Digest Iran Attack

Westlake Legal Group 08markets-1-facebookJumbo Markets Recoil, and Then Ease, as Traders Digest Iran Attack United States Defense and Military Forces Stocks and Bonds Politics and Government Oil (Petroleum) and Gasoline Iraq Iran International Relations Futures and Options Trading Defense and Military Forces

HONG KONG — Oil prices rose and stocks fell as Asian markets began trading on Wednesday, following news that Iran had launched missiles at American forces based in Iraq.

The markets’ concerns eased later in the day as Iran hinted that it would not take hostilities further and President Trump suggested the damage from the attack was limited, raising hopes of a restrained conflict in a region critical to world oil supplies.

Mohammad Javad Zarif, Iran’s foreign minister, said in a tweet that the nation had “concluded proportionate measures in self-defense.” The statement followed two missile attacks on bases in Iraq housing American forces in response to the killing last week of Maj. Gen. Qassim Suleimani.

In his own tweet shortly after, Mr. Trump suggested that damages and casualties sustained by American forces were minimal, though the assessment was continuing. “All is well!” he said on Twitter.

The world’s most broadly watched measure of oil prices, which briefly surged past $70 a barrel, fell back somewhat as trading continued. At midday on Wednesday in Asia, futures prices for Brent crude had risen 1.4 percent to $69.20 a barrel.

The most widely used benchmark for oil prices in the United States, the futures contract for West Texas Intermediate crude, was up 1.3 percent to $63.50 a barrel.

Stock losses also moderated.

At midday, stocks in Tokyo were 1.2 percent lower, Asia’s biggest drop. Earlier in the day they had traded more than 2 percent lower.

Markets in Hong Kong, mainland China and South Korea were all down less than 1 percent.

Futures markets signaled that Wall Street would open lower on Wednesday, though by a moderate amount.

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Oil Jumps and Stocks Fall as Markets Digest Iran Attack

Westlake Legal Group 08markets-1-facebookJumbo Oil Jumps and Stocks Fall as Markets Digest Iran Attack United States Defense and Military Forces Stocks and Bonds Politics and Government Oil (Petroleum) and Gasoline Iraq Iran International Relations Futures and Options Trading Defense and Military Forces

HONG KONG — Oil prices rose and stocks fell as Asian markets began trading on Wednesday, following news that Iran had launched missiles at American forces based in Iraq.

The markets’ concerns eased later in the day as Iran hinted that it would not take hostilities further and President Trump suggested the damage from the attack was limited, raising hopes of a restrained conflict in a region critical to world oil supplies.

Mohammad Javad Zarif, Iran’s foreign minister, said in a tweet that the nation had “concluded proportionate measures in self-defense.” The statement followed two missile attacks on bases in Iraq housing American forces in response to the killing last week of Maj. Gen. Qassim Suleimani.

In his own tweet shortly after, Mr. Trump suggested that damages and casualties sustained by American forces were minimal, though the assessment was ongoing. “All is well!” he said on Twitter.

The world’s most broadly watched measure of oil prices, which briefly surged past $70 a barrel, fell back somewhat as trading continued. At midday on Wednesday in Asia, futures prices for Brent crude had risen 1.4 percent to $69.20 a barrel.

The most widely used benchmark for oil prices in the United States, the futures contract for West Texas Intermediate crude, was up 1.3 percent to $63.50 a barrel.

Stock losses also moderated.

At midday, stocks in Tokyo were 1.2 percent lower, representing Asia’s biggest drop. Earlier in the day they had traded more than 2 percent lower.

Markets in Hong Kong, mainland China and South Korea were all down less than 1 percent.

Futures markets signaled Wall Street would open lower on Wednesday, though by a moderate amount.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Stocks Fall as U.S.-Iran Tensions Mount

The aftershock of the American killing of a powerful Iranian general rippled through financial markets on Monday, as oil prices rose and money moved to the safety of gold and Treasury bonds in the face of rising tensions in the Middle East.

On Wall Street, stocks slipped in early trading, putting the S&P 500 index on track for its second straight decline. The selling was most notable in shares of companies with significant exposure to fuel costs: Airlines, shipping and logistics firms fell. Oil and energy stocks — which can benefit from higher oil prices — rose.

Brent oil, the international benchmark for crude, briefly jumped above $70. The rise in oil prices — Brent crude is up more than 7 percent in less than a month — set the tone for trading in other markets, with stock markets in oil-reliant nations like India and Japan seeing steeper drops in overnight trading. Japan’s Nikkei dropped 1.9 percent, as did India’s key stock market benchmark, the Sensex.

In Europe, shares also took a tumble. Markets in Frankfurt, London, Paris and Amsterdam were all down about 1 percent.

In the United States, discount retailers Dollar Tree and Dollar General, whose customers tend to have lower disposable income and higher sensitivity to increased gas prices, fell more than 1 percent in early trading.

Yields on Treasury bonds — which move in the opposite direction of prices — fell as investors sought out the relative security of government bonds. The yield on the 10-year Treasury note hovered around 1.77 percent in early trading.

The drop in yield sent share prices of finance companies down. Lenders tend to benefit from higher bond yields, which are the foundation for the rates consumers pay to borrow. The financial sector was the worst-performing part of the S&P 500 in early trading Monday.

Prices for precious metals gold and silver, traditionally viewed as a both a safe haven and a hedge against higher inflation, rose more than 1 percent.

Investors showed nervousness as Iran pledged to retaliate for the killing of Qassim Suleimani, the Iranian general, and President Trump raised the specter of additional strikes on Iranian cultural sites if it did so.

The State Department warned of a “heightened risk” of a missile attack near American military bases. Iran later said it would abandon a nuclear agreement and Iraq vowed to expel American troops from the country.

The sudden escalation in tensions in a region that supplies much of the world’s petroleum has roiled oil markets. The West Texas Intermediate, the American oil benchmark, rose 1.6 percent to $64.04 a barrel in futures trading.

Westlake Legal Group api.asp?sym=US@CL Stocks Fall as U.S.-Iran Tensions Mount United States Defense and Military Forces Stocks and Bonds Politics and Government Oil (Petroleum) and Gasoline Middle East Iran gold Futures and Options Trading

But in the United States, investors remained somewhat indifferent to the growing conflict between the United States and Iran. Stocks are coming off one of the best years of recent decades. In 2019, the S&P 500 rose 28.9 percent.

Even after two consecutive days of declines, the market remains less than 1 percent below the record highs it hit on Jan. 2.

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