LOGO
  • Home
  • Analytics
  • Analysts Opinions

Oil prices dip ahead of U.S. crude stocks data

Oil prices inched lower on Tuesday ahead of U.S. crude inventories data, as the market weighed the impact of rising U.S. crude output versus last week's deal between OPEC and other crude producers to extend output curbs.

International benchmark Brent crude futures were trading down 10 cents, or 0.2 percent, at $62.35 per barrel by 0651 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 4 cents, or 0.1 percent, at $57.43 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers last week rolled over their agreement to cut output by 1.8 million barrels per day (bpd) until the end of 2018, aiming to erode a global glut and drive up prices.

Although the world's major oil producers reached an agreement last week, Kazakh Energy Minister Kanat Bozumbayev said on Tuesday that complying with the global oil output cut deal will be complicated for Kazakhstan, one of the non-OPEC members who supported the pact.

Goldman Sachs (NYSE:GS) said Saudi Arabia and Russia showed a stronger commitment to extending cuts and raised its Brent and WTI spot forecasts for 2018 to $62 and $57.50 per barrel respectively.

"By 2019, however, we believe the response of shale and other producers to higher prices will incentivize OPEC and Russia to pare back their now greater spare capacity, leaving risks to prices skewed to the downside," the bank added.

In November, OPEC crude oil output fell by 300,000 bpd to its lowest since May, according to a Reuters survey released on Monday.

However, data last week showed U.S. crude output rose to nearly 9.5 million bpd in September, the highest monthly production since 2015.

"Both contracts (Brent and WTI) have now tested and failed major resistance levels, and all eyes will now be on the U.S. crude inventory data due tonight and tomorrow," said Jeffrey Halley, senior market analyst at OANDA.

While rising U.S. oil production remains a hurdle for OPEC's efforts to rebalance the market, U.S. crude inventories likely fell last week, marking their third straight weekly drop, a preliminary Reuters poll showed.

Seven analysts polled ahead of inventory reports from the industry group American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA) estimated, on average, that crude stocks fell 3.5 million barrels in the week ended Dec. 1.

Asian shares down as tech blues offset U.S. tax cut optimism

Asian shares dipped slightly on Tuesday as investors' rotation out of technology shares took a toll on some of the region's tech heavyweights although hopes of a major tax cut in the United States underpinned risk sentiment. European shares are seen steady, with spread-betters picking Britain's FTSE (FTSE) and Germany's DAX (GDAXI) to be almost flat and France's CAC (FCHI) to edge 0.1 percent lower. MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was down 0.2 percent, driven by a fall in technology shares such as Tencent (HK:0700) and AlibabaGroup Holding (K:BABA). Japan's Nikkei (N225) slipped 0.4 percent, with semi-conductor related shares leading losses while mainland China's start-up board (CHINEXTP) dropped almost 3 percent to its lowest level in four months. "I would say the market is hitting a speed bump after a strong rally so far this year," said Yukino Yamada, senior strategist at Daiwa Securities. While MSCI's ex-Japan Asia-Pacific index flirted with last month's low, it was still up almost 30 percent so far this year, and is on course to mark its best year since 2010. On Wall Street, the benchmark S&P 500 (SPX) finished lower on Monday after setting a record intraday high earlier as the technology sector (SPLRCT), which has led the market's record-setting rally this year, tumbled 1.9 percent. The tech index hit a five-week low and was down 4.3 percent from its record peak hit a week ago though it still remained the best performer of the year with year-to-date gains of 33 percent. Investors switched to banks and retailers, which are seen benefiting from the expected corporate tax cuts. President Donald Trump's goal of slashing taxes on businesses cleared an important hurdle at the weekend when the U.S. Senate narrowly approved the Republican's tax overhaul plan. The S&P 500 banks index <.SPXBK> surged 2.3 percent while battered department store shares also jumped. "Some high-tech shares' valuations are getting stretched. For the entire market to keep rallying, we needed a sector rotation," said Nobuyuki Kashihara, head of research at Asset Management One. "On the whole, the world's shares are supported by a synchronized growth in the global economy," he added. U.S. tax cut optimism supported the dollar, particularly against the yen. Yet, concerns about the ongoing investigation into contacts between Trump's election campaign and Russia sapped some of the market's enthusiasm. The dollar fetched 112.48 yen , little changed in Asia after a brief foray to 113.09 on Monday, which was its highest level in more than two weeks. The euro was steadier at $1.1875, sitting comfortably in its familiar trading range between $1.1810-1.1960, as the common currency was helped by hopes the two major German parties will form a grand coalition. The British pound stood at $1.3475, off last week's two-month high of $1.3550, after European Commission President Jean-Claude Juncker and British Prime Minister Theresa May failed to reach an agreement on a divorce deal. The Australian dollar gained as much as 0.8 percent to a three-week high of $0.7654following strong economic data and a relaxed tone from the country's central bank on the level of the local currency. Bitcoin (BTC=BTSP) ticked down 0.5 percent to $11,558, still hovering near its record high of $11,800 set on Sunday. Oil gained slightly after falling more than 1 percent on Monday, buoyed by expectations of a drop in U.S. crude stockpiles and after last week's deal between OPEC and other crude producers to extend output curbs U.S. West Texas Intermediate futures (CLc1) traded at $57.55 per barrel, up 0.1 percent for the day. International benchmark Brent futures (LCOc1) inched up 0.1 percent to $62.52 a barrel. Some market players fear the killing of former Yemeni president Ali Abdullah Saleh on Monday may destabilize the impoverished and worn-torn country even further, threatening the safety of a major shipping route through the Strait of Bab al-Mandeb on the Red Sea off the Yemeni coasts.

Oil prices fall after U.S. drillers add rigs

Oil fell on Monday after U.S. shale drillers added more rigs last week, but prices still held close to their highest since mid-2015, supported by an extension of output cuts agreed last week by OPEC and other producers.

Drillers in the United States added two oil rigs in the week to Dec. 1, bringing the total count up to 749, highest since September, energy services firm Baker Hughes said in its closely followed report late on Friday.

U.S. West Texas Intermediate (CLc1) was down 46 cents, or 0.8 percent, at $57.90 a barrel at 0431 GMT. Brent futures (LCOc1) were down 39 cents, or 0.6 percent, at $63.34 a barrel.

The U.S. rig count, an early indicator of future output, gained sharply from 477 rigs active a year ago after energy companies boosted spending plans for 2017. [RIG/U]

Drillers over 2017 were encouraged to increase activity as crude prices started recovering from a multi-year price slump around the same time that the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers, including Russia, agreed to production cuts a year ago.

Last week, the producers agreed to extend those cuts of 1.8 million barrels per day (bpd) until the end of next year.

"The extent of U.S. production growth and the strength of global oil demand in 2018 remain the main uncertainties," BMI Research said in a note.

"OPEC (or rather Saudi Arabia) will increasingly work to manage the market," BMI said in the note.

The latest agreement allows for producers to exit the deal early if the market overheats. Russian officials had expressed concern that extending the output cuts might encourage rival U.S. shale oil firms to pump more crude.

Rising U.S. production has been a persistent thorn in OPEC's side and the rig increased for a second straight week.

U.S. output rose in September to 9.5 million bpd, the highest monthly output since 9.6 million bpd in April 2015, according to government data going back to 2005. On an annual basis, U.S. output peaked at 9.6 million bpd in 1970.

Dollar gains on U.S. tax cut progress; Brexit deal eyed

The U.S. dollar bounced to a two-week top on Monday and S&P futures jumped as traders marked the passage of a Senate tax bill over the weekend, a move that raises the risk of more aggressive rate hikes in the world's largest economy.

Pointing to a firm start for European shares, FTSE futures (FFIc1) were up 0.7 percent.

Traders will be focusing their attention on a meeting scheduled for British Prime Minister Theresa May and EU Commission President Jean-Claude Juncker to work on a Brexit deal.

The euro slipped 0.15 percent, while the British pound was steady amid media reports that an agreement was near on the terms of the Brexit divorce.

Asian shares started the week with a whimper.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) hovered near more than one-month lows on fears U.S. policy tightening could suck liquidity from emerging markets and derail global growth.

The greenback jumped 0.7 percent to as far as 112.98 yen, the highest since Nov. 17 on expectations of faster U.S. rate hikes as fiscal policy was set to be eased even while the U.S. economy was running at or near full employment.

A U.S. tax cut could also boost corporate profits and lead to a slew of share buy-backs. U.S. stock markets have already rallied for months on hopes that Washington would provide significant tax cuts for corporations.

Indeed, EMini S&P stock futures (ESc1) jumped 0.6 percent on Monday.

U.S. healthcare shares are also set to rally after drugstore chain operator CVS Health Corp (N:CVS) said on Sunday it had agreed to acquire U.S. health insurer Aetna Inc (N:AET) for $69 billion.

China's SSE (LON:SSE) Composite (SSEC) slipped 0.2 percent, while Australian shares (AXJO) eased 0.1 percent and Japan's Nikkei (N225) fell 0.5 percent. Among gainers were Hong Kong's Hang Seng index (HSI) and South Korea's KOSPI (KS11).

"If you do see a U.S. fiscal stimulus in 2018 all its likely to do is accelerate the need for further U.S. policy tightening which indirectly could be negative for emerging markets," said Chris Weston, Melbourne-based chief market strategist at IG.

"If real yields trend higher and the U.S. dollar rises further that would put emerging markets and Asia on the back burner," Weston added.

Yields on two-year notes (US2YT=RR) rose to 1.806 percent, while those on the 10-year bond climbed to 2.4026 percent.

The dollar index (DXY) added 0.3 percent against major currencies.

Bitcoin (BTC=BTSP) hovered close to an all-time high of $11,800 set on Sunday after the U.S. derivatives regulator allowed CME Group (O:CME) and CBOE Global Markets (O:CBOE) to list bitcoin futures.

The cryptocurrency was last trading around $11,375 on the Luxembourg-based Bitstamp exchange.

In commodity markets, U.S. crude (CLc1) was off 40 cents at $57.96. Brent crude (LCOc1) slipped 31 cents to $63.42, drifting away from a near 2-1/2 year peak of $64.65 touched last month.

Stocks- U.S. Futures Rise As OPEC Meeting Underway

U.S. futures pointed to a higher opening bell on Thursday as ministers from the Organization of Petroleum Exporting Countries (OPEC) meet to decide whether to extend their current production agreement beyond a March 2018 deadline.

The S&P 500 futures inched forward eight points or 0.31% as of 6:34 AM ET (11:34 AM GMT) while Dow futures rose 93 points or 0.39%. Meanwhile tech heavy Nasdaq 100 futures increased 21 points or 0.35%.

OPEC members will decide today on whether or not to expand their current production cut agreement. Under the original terms of the deal, OPEC and 11 other non-OPEC producers, led by Russia, agreed to cut output by about 1.8 million barrels per day for the first six months of 2017. The agreement was extended in May of this year for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices.

Financial stocks were among the top gainers in pre-market trading. Credit Suisse(SIX:CSGN) gained 3.42% while Bank of America (NYSE:BAC) was up 0.14% and the Royal Bank of Scotland (LON:RBS) increased 1.04%. Meanwhile Chinese e-commerce firm Alibaba (NYSE:BABA) surged 1.27%.

Elsewhere technology firm Juniper Networks Inc (NYSE:JNPR) slumped 5.74% after telecommunications firm Nokia (HE:NOKIA) denied it was preparing to buy the network. Nokia slipped 0.60% after the news.

The tax reform bill is also being closely watched by investors. On Wednesday the Senate voted to begin debate on the Republican version of the bill, bringing it closer to a final vote.

In economic news, the Commerce Department will publish data personal income and consumer spending for October, at 8:30AM ET (1330GMT).The data includes the personal consumption expenditures (PCE) inflation data, which is the Fed's preferred metric for inflation. Investors will closely watch the reports for signals that the Fed will raise interest rates.

Stocks in Europe were up. Germany’s DAX surged 108 points or 0.83% while in France the CAC 40 increased 26 points or 0.50% and in London, the FTSE 100 rose 19 points or 0.26%. Meanwhile the pan-European Euro Stoxx 50 inched forward 22 points or 0.62% while Spain’s IBEX 35 was up 41 points or 0.40%.

In commodities, gold futures inched down 0.08% to $1,281.34 a troy ounce while crude oilfutures increased 0.94% to $57.84 a barrel. The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.11% at 93.32.

OPEC, Russia agree oil cut extension to end of 2018

OPEC and non-OPEC producers led by Russia agreed on Thursday to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude while signaling a possible early exit from the deal if the market overheats.

Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn't flip into a deficit too soon, prices don't rally too fast and rival U.S.

shale firms don't boost output further.

Russia needs much lower oil prices to balance its budget than OPEC's leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.

The producers' current deal, under which they are cutting supply by about 1.8 million barrels per day (bpd) in an effort to boost oil prices, expires in March.

Saudi Energy Minister Khalid al-Falih told reporters the Organization of the Petroleum Exporting Countries and non-OPEC allies had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market.

OPEC also decided to cap the combined output of Nigeria and Libya at 2017 levels below 2.8 million bpd. Both countries have been exempt from cuts due to unrest and lower-than-normal production.

Falih said it was premature to talk about exiting the cuts at least for a couple of quarters as the world was entering a season of low winter demand. He added that OPEC would examine progress at its next regular meeting in June.

"When we get to an exit, we are going to do it very gradually ... to make sure we don’t shock the market," he said.

OPEC and Russia together produce over 40 percent of global oil. Moscow's first real cooperation with OPEC, put together with the help of President Vladimir Putin, has been crucial in roughly halving an excess of global oil stocks since January.

With oil prices rising above $60, Russia has expressed concerns that an extension for the whole of 2018 could prompt a spike in crude production in the United States, which is not participating in the deal.

A joint OPEC and non-OPEC communique said the next meeting in June 2018 would present an opportunity to adjust the agreement based on market conditions.

The Iraqi, Iranian and Angolan oil ministers also said before Thursday's meetings that a review of the deal was possible in June in case the market became too tight.

International benchmark Brent crude (LCOc1) rose around 0.5 percent on Thursday to trade above $63 per barrel.

GLUT OR SHORTAGE?

Just as OPEC gathered in Vienna, U.S. government data showed that U.S. oil production rose 3 percent in September to 9.48 million bpd. But Falih said OPEC "won't be quick on the trigger" to react to short-term U.S. output spikes.

U.S. shale oil producers, which effectively triggered the global oil glut of recent years, have been adjusting their message over the past year, switching away from combative language with regard to OPEC actions.

"If producers in the U.S. increase their rig count over the next few months due to higher prices then I expect another price collapse by the end of 2018," said Scott Sheffield, executive chairman of Pioneer Natural Resources Co (N:PXD), one of the largest producers in the Permian Basin of Texas and New Mexico, the largest U.S. oilfield.

"I hope that all U.S. shale companies will maintain their current rig counts and use all excess cash flow to increase dividends back to their shareholders," he told Reuters.

Gary Ross, a veteran OPEC watcher and founder of Pira consultancy, said the market could surprise on the upside with Brent rising to $70 if there were a major supply disruption.

"Everywhere you look there is an ever-present risk to supply," Ross said.

"In Iraq's Kurdistan there is a major risk to oil exports because of tensions with Baghdad, in Libya militias are still fighting, in Nigeria the risks of disruptions are significant, Venezuela is on the verge of default, Iran could again face U.S. financial sanctions and even in Saudi Arabia political risk is on the rise," Ross added.

The production cuts have been in place since the start of 2017 and helped halve an excess of global oil stocks although those remain at 140 million barrels above the five-year average, according to OPEC.

Russia has signaled it wants to understand better how producers will exit from the cuts as it needs to provide guidance to its private and state energy companies. On Thursday, Novak said all companies were on board with the latest limits.

Oil Trims Losses as U.S. Crude Stocks Drop 3.4M Barrels Last Week

Oil prices pared losses on Wednesday, after data showed U.S. crude stockpiles dropped more than forecast last week.

U.S. West Texas Intermediate (WTI) crude futures were at $57.87 a barrel, down 12 cents, or about 0.2%, by 10:35AM ET (1535GMT). Prices were at around $57.78 prior to the release of the inventory data.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., dipped 10 cents, or around 0.2%, to $63.14 a barrel.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 3.4 million barrels in the week ended Nov. 24. That compared with analysts' expectations for a decline of 2.3 million barrels, while the American Petroleum Institute late Tuesday reported a supply-gain of 1.8 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 2.9 million barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 453.7 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

U.S. crude oil imports averaged 7.3 million barrels per day last week, down by 544,000 barrels per day from the previous week.

The report also showed that gasoline inventories increased by 3.6 million barrels, compared to expectations for a gain of 1.2 million barrels. For distillate inventories including diesel, the EIA reported a gain of 2.7 million barrels.

Oil prices extended their decline into a second session on Tuesday as doubts over an extension to a production-cut deal at Thursday's OPEC meeting weighed.

Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a March 2018 deadline.

Most market analysts expect the oil cartel to extend output cuts for a further nine months until the end of next year, but the terms were so far unclear, as Russia has sent mixed signals about whether it will back the move.

In November last year, OPEC and 11 other non-OPEC producers, led by Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30. The agreement was extended in May of this year for a period of nine months until March 2018 in a bid to reduce global oil inventories and support oil prices.

The OPEC-led production cuts have been one of the key catalyst supporting the recent rally in oil prices amid expectations that rebalancing in oil markets are well underway. However, fears that rising U.S. output would dampen OPEC’s efforts to rid the market of excess supplies are prevented prices from rising much further, according to market participants.

ech tumble hits Asian stocks, bitcoin steadies

Asian shares fell on Thursday, weighed down by a plunge in high-flying tech shares on fears that a long boom in micro-chips may have peaked, while virtual currency bitcoin steadied after a roller-coaster ride in the previous session.

The digital currency's 10-fold increase in price this year has stoked worries of a bubble and potential crash that could rattle conventional financial markets.

Bitcoin (BTC=BTSP) rose nearly 3 percent to around $10,100 during Asian trading on Thursday. On Wednesday, it surged to a record high of $11,395, before it slipped to a low of $9,250.

European shares were seen falling slightly, with spread-betters expecting Britain's FTSE (FTSE) to fall 0.3 percent and France's CAC (FCHI) and Germany's DAX (GDAXI) to fall 0.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) dropped 1.3 percent, with technology bellwether Samsung Electronics (KS:005930) falling 4.3 percent to two-month lows and Taiwan's TSMC (TW:2330) down 3.6 percent.

Japan's Nikkei (N225) reversed early losses to end 0.6 percent higher, though the country's electronic machinery makers index <.IELEC.T> was down 1.5 percent.

In the U.S., the Nasdaq Composite (IXIC) dropped 1.27 percent as investors shifted to financials and other sectors even as the S&P 500 (SPX) was almost flat and the Dow Jones Industrial Average (DJI) gained 0.44 percent. (N)

Shares of Amazon.com (O:AMZN), Apple (O:AAPL), Google parent Alphabet (O:GOOGL) and Facebook (O:FB) fell between 2 percent and 4 percent. Among the year's other high fliers, Netflix (O:NFLX) slid 5.5 percent.

Possibly weighing on them were concerns, sparked by a Morgan Stanley (NYSE:MS) report earlier this week, that "super-cycle" in memory chip demand is likely to peak soon.

"It is true that if you look at the world's semiconductor sales on chart, their year-on-year growth appears to be peaking out. Given the current high sales level, some market players would be naturally worried," said Hiroshi Watanabe, economist at Sony Financial Holdings.

"But if you look at what's driving demand, it's not just smart phones and actually a lot of things, such as data centres. The world's demand is likely to continue expanding in 2018 and I don't see the need to be pessimistic now," he said.

Some market players said selling in tech shares had more to do with profit-taking ahead of the end of the year, and described the slide as a healthy correction.

"Tech shares have done so well over the past year. There are many shares that saw their prices doubling. So investors have been on guard. They have been looking for an opportune time to sell," said Norihiro Fujito, senior investment analyst at Morgan Stanley.

The Nasdaq index is still up 26.8 percent so far this year, more than 9 percentage points above gains in the S&P. The ex-Japan Asia-Pacific MSCI index edged up 0.5 percent for the month, taking its gains for far this year to more than 30 percent.

On the other hand, U.S. bond yields rose across the maturities and the dollar gained some traction after the U.S. third-quarter GDP growth was revised up to an annualised 3.3 percent , from the initial estimate of 3.0 percent .

That was the fastest growth in three years, though economists noted that inventories, goods yet to be sold, accounted for nearly a quarter of GDP growth.

The U.S. Senate on Wednesday took a step toward passage of tax legislation that is a top White House priority, setting up a likely decisive vote later this week.

But it remained unclear if the bill has enough Republican support to become law.

The 10-year U.S. Treasuries yield rose to 2.389 percent (US10YT=RR), edging near this month's high of 2.414 percent.

There was no immediate market response after U.S. President Donald Trump nominated Carnegie Mellon University professor Marvin Goodfriend, viewed as a policy hawk, to be a member of the Federal Reserve Board of Governors.

The euro traded at $1.1863, steady in early Asian trade but has been on retreat since it had hit a two-month high of $1.1961 on Monday.

The dollar also firmed to 112.00 yen from Monday's ten-week low of 110.85 yen.

The British pound hit a two-month high of $1.3480 after European Union diplomats said that Britain has moved "close" to EU demands over Brexit.

Among Asian currencies, the South Korean won stepped back from a 2-1/2-year high set the previous day after the country's central bank raised interest rates for the first time in more than six years, which had been widely expected.

Oil traded cautiously ahead of an OPEC meeting in Vienna later in the day, with members set to debate an extension of the group's supply-cut agreement.

While the Organization of Petroleum Exporting Countries and key non-member Russia look set to prolong oil supply cuts until the end of 2018, they have signalled that they may review the deal when they meet again in June if the market overheats.

U.S. crude futures (CLc1) traded at $57.41 per barrel in early Asian trade, up 0.2 percent, while Brent futures (LCOc1) rose 0.4 percent to $63.37 a barrel.

Dollar cheered by tax cut progress, outshone by bitcoin

The dollar held firm on Wednesday after Wall Street shot to record peaks amid signs of progress on U.S. tax cuts, while bitcoin topped $10,000 on a host of exchanges as the frenzy for cryptocurrencies showed no sign of fading.

Asian share markets were not as jubilant, checked by caution over the latest missile test by North Korea and concerns at recent softness in Chinese shares.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was down a fraction, while China's blue chip index (CSI300) slipped 1 percent.

Among the better performers, Japan's Nikkei (N225) added 0.4 percent, while Australia's main index (AXJO) rose 0.5 percent.

The prospects for a U.S. tax cut seemed to improve after Senate Republicans rammed forward their bill in a partisan committee vote that set up a full vote by the Senate as soon as Thursday, although details of the measure remained unsettled.

Republican leaders conceded that they have yet to round up the votes needed for passage in the Senate, where they hold a narrow 52-48 majority.

Some analysts, however, did warn of the risks of unintended consequences if the package was passed.

"Tax cuts will mainly boost the demand side of the economy at a time when the economy has little spare capacity," said Jeremy Lawson, chief economist at Standard Life (LON:SLA) Investments.

"For that reason, the package will primarily bring forward activity with most of the stimulus eventually offset by the Federal Reserve lifting interest rates more quickly."

Fed chair nominee Jerome Powell, in his Senate confirmation hearing on Tuesday, said the case for a December rate hike was coming together, though he dodged comment on the tax proposals.

BUBBLY BITCOIN

Powell also hinted at a lighter touch for bank regulation, saying current rules were already tough enough.

The S&P financial sector (SPSY) soared 2.6 percent in reaction, its biggest daily gain since March 1. That helped the Dow (DJI) climb 1.09 percent, while the S&P 500 (SPX) rose 0.99 percent and the Nasdaq (IXIC) added 0.49 percent. (N)

Adding to the good cheer was data showing U.S. consumer confidence surged to a near 17-year high in November, while home prices rose sharply in September, which should underpin consumer spending.

All of which helped the dollar regain some ground. Against a basket of currencies it was steady at 93.219 (DXY) and off a two-month trough of 92.496 touched on Monday.

The dollar likewise edged up to 111.54 yen and away from a 10-week low of 110.85, while the euro backed off to $1.1848 .

That paled in comparison to bitcoin which flew to $10,200 (BTC=BTSP) on BitStamp, a major trading platform based in Luxembourg.

The latest surge brought its gains for the year so far to over 950 percent, leaving more than a few observers baffled.

"The market is very illogical. There's no way to rationally value bitcoin as an asset," said Thomas Glucksmann, head of marketing at Hong Kong exchange Gatecoin.

"There's nothing that makes sense because there's no fundamentals behind bitcoin. What people are buying into is the idea of how this technology can be used in the future."

In old-fashioned commodity markets, gold looked rather dull at $1,295.00 an ounce.

Oil eased amid uncertainty over the outcome of OPEC talks and a surprise rise in crude inventories. [O/R]

U.S. crude (CLc1) dipped 32 cents to $57.67, while Brent crude oil (LCOc1) lost 43 cents to $63.18 a barrel.

Oil falls on uncertainty over extended output cuts, surprise rise in U.S. crude stocks

Oil prices fell on Wednesday on doubts OPEC and Russia will agree on extending a crude production cut to cover all of 2018, and after a report of an unexpected rise in U.S. crude oil inventories.

U.S. West Texas Intermediate (WTI) crude futures were at $57.76 a barrel at 0749 GMT, down 23 cents, or 0.4 percent below their last settlement.

Traders said WTI was pulled lower by a report from the American Petroleum Institute (API) late on Tuesday that showed U.S. crude inventories rose by 1.8 million barrels in the week ended Nov. 24 to 457.3 million barrels.

Official U.S. oil inventory data is due later on Wednesday.

WTI was also weighed down by the gradual restart on Tuesday of the Keystone pipeline, which supplies Canadian crude to the United States.

Brent crude futures were at $63.31 a barrel, down 30 cents, or 0.4 percent.

Oil prices have received a broad lift this year, with Brent up by 40 percent since mid-2017, due to an effort by the Organization of the Petroleum Exporting Countries (OPEC) and a group of other producers, led by Russia, to withhold 1.8 million barrels per day (bpd) of output.

The deal expires in March 2018, but OPEC will meet on Nov. 30 and is expected to discuss ways of extending the cut.

While OPEC and Russia are expected to extend their supply cuts for the whole of 2018, they are likely to include an option to review the deal in June, OPEC sources said on Tuesday, after Moscow expressed concerns the market could overheat.

"They plan to extend for 2018 but with the option to review the decision in June, i.e. they agree not to agree anything," said Ralph Leszczynski, head of research at shipping brokerage Bancosta in Singapore.

Many analysts say an extension is needed to balance oil markets, and also to keep the economies of oil exporting nations afloat. But not all agree.

"Given the agreement doesn't expire for another four months, adding an additional nine months on that to the end of 2018 seems unnecessarily eager given the market does seem to be rebalancing," said Greg McKenna, chief market strategist at AxiTrader.

Beyond cutting supplies, a healthy global economy has been helping oil markets back into balance after years of oversupply.

U.S. bank Morgan Stanley (NYSE:MS) said global economic growth was "likely to gain momentum and breadth in 2018".

With demand healthy and many producers profitable at current prices, hedging activity has picked up, energy consultancy Wood Mackenzie said.

"Hedging activity surged in Q3 2017 as oil producers rushed to lock in rising prices for future production ... 33 of the largest upstream companies with active hedging programs ... added 897,000 bpd (annualized) of new oil hedges during Q3 2017, up 147 percent from Q2 2017," Wood Mackenzie said.