Oil soars on OPEC hopes, dollar renews
its surge
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[November 30, 2016]
By Marc Jones
LONDON (Reuters) - Oil jumped more than 6
percent and the dollar, U.S. bond yields and stocks all pushed higher on
Wednesday as signals from OPEC suggested the group was closing in on a
deal to cut production.
Combined with fresh concern about China's banking system, a stress test
for British banks and a raft of euro zone data, the OPEC meeting topped
off a wild November for financial markets that has been dominated by
Donald Trump's victory in the U.S. presidential election.
Brent oil <CLc1> was still rising, having surged back toward $49 a
barrel after OPEC's secretary general said a deal would be reached as he
headed into a meeting of the group in Vienna [O/R]
Top oil producer Saudi Arabia said a deal was close despite some loose
ends. Iran, which is considered crucial to a breakthrough because its
output has been rising after western sanctions were lifted, said it was
also "optimistic".
"I think we are looking at a very positive meeting," added UAE Energy
Minister Suhail bin Mohammed al-Mazroui, who was echoed by counterparts
from Angola, Algeria and Nigeria.
![](http://archives.lincolndailynews.com/2016/Nov/30/images/ads/current/farmers_bank_sda_prom_050614.png)
A possible rise in oil prices has also been feeding expectations for a
rebound in global inflation. Those expectations have been gathering
momentum since Trump promised $1 trillion of new spending on
infrastructure.
It has meant an electrifying run for the dollar, which was up at 1.0645
per euro <EUR=> and 113.04 yen <JPY=> by 1020 GMT (5:20 a.m. ET) as it
headed for its strongest month against the Japanese currency in seven
years. [FRX/]
U.S. Treasury yields <US10YT=RR> -- the benchmark for global borrowing
costs -- were also rising after a two-day pause. They hovered just under
2.33 percent, having started November at just over 1.8 percent.
"Dollar strength has mainly been driven by expectations, so these can
only carry you so far," Commerzbank currency strategist Esther Reichelt
said. "In the end we want to see some facts to show these changed
expectations are justified."
European stocks were lifted by a jump in oil companies <.SXEP> amid the
OPEC talk, although banks struggled as Royal Bank of Scotland <RBS.L>
failed a Bank of England stress test and Italian lenders fell before a
referendum on the country's political system on Sunday.
Worries about China's financial sector had also spread in Asia
overnight. Shanghai stocks fell about 1 percent amid concern about
government moves to stem capital flight and halt the recent sharp fall
in the yuan.
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![](../images/113016PICS/news_q29.jpg)
A man walks past an electronic board showing Japan's Nikkei average
outside a brokerage in Tokyo, Japan, November 18, 2016. REUTERS/Toru
Hanai
![](http://archives.lincolndailynews.com/2016/Nov/30/images/ads/current/st_claras_lda_082114.png)
"The stress could continue for a while," said Gu Weiyong, chief
investment officer at hedge fund Ucom Investment Co. "Whether the
situation gets better depends on the willingness of the central bank
to inject more liquidity into the system."
EMERGING PAIN
Emerging stocks <.MSCIEF> rose marginally but were headed for their
biggest monthly fall since January. Currencies hit by the latest
onslaught from the dollar were also set to close November with hefty
losses [EMRG/FRX].
The Turkish lira <TRY=> and Mexican peso <MXN=> have lost around 8
to 9 percent versus the dollar for their biggest monthly declines
since 2008 and 2012 respectively.
Not only riskier assets have suffered. Gold <XAU=> is on track for
its biggest monthly decline since mid 2013, largely pressured by the
bets of a series of U.S. interest rate hikes over the next year.
The euro <EUR=> has fallen over 3 percent. Euro zone inflation for
November came in at 0.6 percent year-on-year on Wednesday. That was
its highest in two years, although still below the European Central
Bank's preferred level of just under 2 percent.
![](http://archives.lincolndailynews.com/2016/Nov/30/images/ads/current/stacy_sda_101816.png)
The ECB meets next week, and expectations are the bank will extend
its stimulus program, already at more than 1.5 trillion euros. Euro
zone government bond yields nudged lower on Wednesday [GVD/EUR].
(Additional reporting by Jemima Kelly in London, editing by Larry
King)
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