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Asian Stock Outlook Burnished With Oil Above $40 on Weak Dollar

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Euro Weakens

Asian stock were on track for their longest run of weekly gains in 1 1/2 years as a resurgence in crude oil prices melds with a dovish Federal Reserve to bolster appetite for riskier assets. The dollar lingered near an eight-month low.

Mining and energy shares drove Australia’s benchmark to its highest level since the start of January, and index futures in South Korea and Hong Kong signaled gains after the Dow Jones Industrial Average erased its 2016 losses. Osaka-traded Nikkei 225 Stock Average futures were down, however, as the greenback maintained declines versus the yen to Australia’s dollar. The Bloomberg Dollar Spot Index was near its lowest closing level since June and forward contracts on Asian emerging-market currencies foreshadowed further gains. U.S. crude held above $40 a barrel, close to its highest.

The revival in equities moved on to a more solid footing this week as the Fed reduced the number of interest-rate hikes it expects to enact in 2016 amid concern over a global slowdown and its impact on the U.S. economy. Oil’s more than 50 percent recovery from an almost 13-year low reached just five weeks ago has underpinned a revival in risk assets, burnishing sentiment among traders bruised from the volatile start to the year. Despite stimulus moves in Japan and the euro area having a mixed impact on markets, policy makers pressed ahead this week, with the Fed’s dovish comments followed by rate cuts in Norway and Indonesia. The Bank of England held its rate at a record low.

“Markets are still settling down after the more-dovish-than-expected Fed,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients. “It appears FOMC members have become more concerned with the outlook for the global economy. Markets, of course, started the year with their own case of the jitters, but have shown a little more stability of late. Are central bankers therefore just a little late to the party? Or do they know something that we don’t?”

China reports on property prices Friday, and a gauge of consumer confidence in New Zealand is due. Japan updates on store sales and Thailand issues data on foreign reserves, while the Philippines reports on the balance of payments.

Stocks

Australia’s S&P/ASX 200 Index climbed a third consecutive day, adding 0.9 percent as of 8:48 a.m. Tokyo time following the bounce in commodities. Prices for iron ore, the country’s biggest export earner, rose 4.7 percent Thursday, with Bloomberg’s Commodity Index jumping 2.1 percent to its highest level since Dec. 4. New Zealand’s S&P/NZX 50 Index increased 0.3 percent, headed for a weekly advance of 1.1 percent, also its fifth straight gain.

Dow Average futures were up 0.2 percent with those on the Standard & Poor’s 500 Index after last session’s gains of at least 0.7 percent in those indexes. Contracts on the Kospi index in Seoul added 0.3 percent in most recent trading, while those on Hong Kong’s Hang Seng and Hang Seng China Enterprises indexes rose at least 0.2 percent.

In Japan, the outlook was less clear, with yen-denominated futures on the Nikkei 225 Stock Average climbing 0.4 percent to 16,770 after slipping 0.8 percent the previous session. In the Osaka pre-market, Nikkei 225 futures were bid for 16,780, down from 16,820 at their close on Thursday, while Singapore-traded contracts lost 0.5 percent to 16,730.

The yen, which typically moves at odds with Japanese stocks, was little changed at 111.32 per dollar after climbing 1 percent on Thursday. The currency is set for a weekly advance of 2.2 percent, the most in a month.

“There’s concern for exporters’ earnings,” Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo, said by phone. “If the yen’s trading around 114 to the dollar than companies will expect profits next fiscal year, but when its 110, most exporters will post losses.”

West Texas Intermediate oil rose 0.2 percent to $40.33 a barrel, on track for a weekly climb of 4.8 percent following Thursday’s 4.5 percent surge.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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Nigeria's economic Productivity

OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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