Wall Street shares traded within a narrow range and European markets were lower Tuesday as oil prices fell slightly on reports that the OPEC cartel would increase its supply.þþStill, the escalating fighting in Libya and renewed violence in Yemen kept traders on edge. And oil prices were off their lows for the day. þþGovernment warplanes have repeatedly bombed rebel positions near the oil refinery in the coastal city of Ras Lanuf, seeking to drive opposition forces back farther to the east, as Libya seemed to slide closer into civil war. þþ“Oil is pushing lower this morning on the combination of rumors that Qaddafi may be looking for a trial-free exit from Libyan leadership and on the news that some of the OPEC cartel will follow Saudi in increasing supply,” said Jane Foley, an analyst at Rabobank International. þþThe Kuwaiti oil minister, Sheik Ahmad Fahd al-Sabah, was quoted by Reuters as saying, “We are in consultations about a potential output increase, but have not yet decided.” þþThe benchmark oil contract on the New York Mercantile Exchange declined 32 cents, to $105.12 a barrel. Brent crude in London was down $1.60 at $113.44 a barrel, down more than $4 from Monday’s high. þþOPEC, which according to analysts at Platts is producing almost 30 million barrels of oil a day, is not scheduled to meet again formally until June 8 in Vienna. The group has repeatedly said the spike in prices is fueled by market fear driven by speculative investors rather than a tangible shortage of supply. þþIran’s OPEC governor, Mohammad Ali Khatibi, played down speculation that the cartel would pump more oil. þþ“There is no shortage in the market,” he told Reuters. “There is no need for further OPEC supply.” þþ“But the consumers are worried, this is psychological.” þþIn early trading, the Dow Jones industrial average was up 10.52, or 0.1 percent, while the broader Standard & Poor’s 500-stock index was flat. The technology heavy Nasdaq dropped 6.78 or 0.24 percent. þþIn Europe, the FTSE 100 in London was down 0.46 percent while the CAC 40 fell 0.22 percent. In Frankfurt. the DAX was 0.77 percent lower. þþIn earnings news, the liquor company Brown-Forman said its net income rose 30 percent in the fiscal third-quarter, thanks to growing international sales and a strong performance by its flagship Jack Daniel’s brand. þþAnd the fast food restaurant chain McDonald’s said that sales at restaurants open at least a year rose 3.9 percent in February. þþOver the last few weeks oil prices and stocks markets have mostly moved in opposite directions. Stocks are effectively a leading indicator of perceptions for economic expansion and the vagaries of the oil price affect perceptions of the state of the global recovery. þþAnalysts reckon that developments in North Africa and the Middle East will continue to be the main point of interest in the markets for a while yet. The big concern is that if countries like Saudi Arabia experience an uprising on the scale of those already seen in Tunisia, Egypt and Libya, then oil could rise as high as $200 a barrel. þþThat would be a difficult situation for the economy, as it would stoke inflationary pressures and at the same time dampen growth. “Markets remain very much at the mercy of oil prices,” a trader at IG Markets, Terry Pratt, said. þþEarlier in Asia, Japan’s benchmark 225 stock average added 0.2 percent to 10,525.19, while Hong Kong’s Hang Seng rose 1.7 percent to 23,711.70. Mainland Chinese shares edged higher — the Shanghai benchmark gained 0.1 percent to 2,999.94, while the Shenzhen Composite Index of China’s smaller, second exchange added 0.3 percent to 1,307.71. þþ
Source: NY Times
