Oil prices jump
Meanwhile, oil prices rose in the morning of Asian trading hours. International benchmark Brent crude futures were up 4.38% to $32.86 per barrel. U.S. crude futures added 5.27% to $23.96 per barrel.
The moves came after OPEC and its allies, known collectively as OPEC+, finalized an agreement to cut production by 9.7 million barrels per day. That’s the single largest output cut in history.
“That they could cobble a historic deal in the face of unprecedented demand shortfall suggests that oil markets will not be as rattled and so there should be a floor (on prices),” Vishnu Varathan, head of economics and strategy at Mizuho Bank, told CNBC’s “Squawk Box” on Monday. He did, however, describe the deal as “very fraught.”
OPEC+ is hoping that nations outside of the group, including the U.S., Canada and Norway, will also cut back on production in an effort to shore up prices. While Trump had previously stopped short of saying the U.S. would scale back production, he has noted that market forces would naturally curb output.
Varathan said the question remained over “how much higher oil prices can sustainably go.”
“The free market cuts, so to speak, that the U.S. has provided will probably not have much legs to go on because they’ll then adjust to upward prices and then that’s gonna cause a little bit more unhappiness with Russia and Saudi (Arabia),” he said.
Developments surrounding the global coronavirus pandemic also likely to continue to weigh on investor sentiment, with more than 1.8 million confirmed cases globally while at least 112,241 lives have been taken, according to data compiled by John Hopkins University.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.479 after declining from levels above 100 last week.
The Japanese yen traded at 108.11 per dollar after seeing levels above 108.8 last week. The Australian dollar changed hands at $0.6333 after rising from levels below $0.62 in the previous trading week.
What’s on tap for Monday:
- India: Consumer Price Index for March at 8:00 p.m. HK/SIN
— CNBC’s Pippa Stevens contributed to this report.
Stocks in Asia trade lower; oil prices jump as OPEC and allies finalize record production cut
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