NSE Oil Index crashes 2.1 percent as higher oil prices boost equities worldwide
The Nigerian Stock Exchange’s Oil and Gas Index at the end of yesterday’s performance recorded a significant decline of over 2 percent amidst rising values recorded in counterparts across the globe, on account of profit taking in Total Nigeria that dropped 5.00 percent and Forte Oil that lost 9.74 percent.
Specifically, European and Asian stocks received a boost on Tuesday as Wall Street’s all four major indices closed at record highs for the first time since 1999 as a result of renewed focused on the oil rally which was driven by rising hopes that OPEC members will strike a deal next week.
“There are clearly no signs of profit taking yet, with Donald Trump’s reflationary economic plans of cutting taxes, infrastructure spending and less regulations remain to be the number one reason fueling stocks’ gains. Although the bull might become tired soon, shorting equities at record highs doesn’t seem a great idea.” said Hussein Sayed, Chief Market Strategist at Forex Time (FXTM).
West Texas Intermediate (WTI) also known as Texas light sweet, a grade of crude oil used as a benchmark in oil pricing has rebounded by more than 15 percent from its November 14 low to trade at its highest levels in three weeks after comments from Iran and Iraq, who are considered OPEC’s most hesitant members to cut or freeze output are sending signs that they are willing to join forces.
According to Hussein, Russia was also an additional factor contributing to the rally with Putin saying he sees a high probability that an agreement to curb production will be reached by end of November. Prices are clearly driven by sentiments and there is still more room to the upside, so it’s better for OPEC to be united in Vienna, not only to spike prices, but to gain back some credibility.
“The WTI’s rebound with prices charging towards $49, the repeated comments from Iraq and Iran displaying their readiness towards fighting the oversupply woes have played a key part in oil’s resurgence while Russia’s willingness to join an OPEC led production freeze continues to boost investor attraction towards the commodity.
