USA/SAUDI ARABIA: Dow, S&P end little changed; oil rises despite Saudi promise to pump more

Record ID: 189823

  • Title: USA/SAUDI ARABIA: Dow, S&P end little changed; oil rises despite Saudi promise to pump more
  • Date: 24th June 2008
  • Summary: (BN11) NEW YORK, NEW YORK, UNITED STATES (JUNE 23, 2008) (REUTERS) (SOUNDBITE) (English) RAY CARBONE, PRESIDENT, PARAMOUNT OPTIONS, SAYING: "The effect seems to be not much, or the opposite effect as intended. We are up on the day. The view is really that this is a paltry production increase, and it's the wrong kind of oil that the market needs anyway: it's that heavy, high-sulfur, sour crude, so markets have reacted slightly bullishly today."
  • Embargoed: 9th July 2008 13:00
  • Keywords:
  • Topics: International Relations,Economic News
  • Reuters ID: LVA9UVQFJ50RYUL8U01G50AIZY5D
  • Story Text: The Dow and the S&P 500 ended effectively unchanged on Monday (June 23) in thin trade as renewed concerns about the outlook for financial shares offset gains in energy stocks and news of a takeover in the agricultural sector.
    Bunge Ltd, the U.S. fertilizer producer and oilseed processor, agreed to buy Corn Products International Inc for $4.4 billion in stock. That kept losses in check as consumer discretionary stocks took a beating after Goldman Sachs recommended that clients "sell" the sector on economic concerns. Shares of coffee chain Starbucks, online retailer eBay, and iPod maker Apple fell, pushing the Nasdaq lower.
    The Dow Jones industrial average dipped just 0.33 of a point to finish essentially flat at 11,842.36. The Standard & Poor's 500 Index edged up just 0.07 of a point, or 0.01 percent, to close at 1,318.00. The Nasdaq Composite Index, meanwhile, fell 20.35 points, or 0.85 percent, to close at 2,385.74.
    Oil rose on Monday on Nigerian supply disruptions and escalating tensions between Israel and Iran, while Saudi Arabia's promise to pump more oil failed to win over a sceptical market.
    "The view is really that this is a paltry production increase, and it's the wrong kind of oil that the market needs anyway: it's that heavy, high-sulfur, sour crude, so markets have reacted slightly bullishly today," said Ray Carbone, President of Paramount Options.
    Saudi Arabia confirmed it will lift production for a second time to 9.7 million barrels per day (bpd) in July, its highest in more than 30 years, and pledged on Sunday (June 22) to pump even more if the market demanded it.
    U.S. crude settled at $136.74 a barrel, up $1.38. London Brent crude settled at $135.91 a barrel, up $1.05.
    Carbone said to expect more of the same from oil markets in the coming months.
    "We have to watch the dollar, we have to watch Nigeria, and of course we have to watch the rhetoric between Israel and Iran because that is the potential very big move on the horizon should there be any kind of military action regarding their nuclear enrichment program. So lots of things to watch, and the only guarantee I can make is volatility."
    Nigeria's senior oil workers union began a limited strike at Chevron on Monday. While the stoppage has not disrupted production yet, it added to concerns about supplies from the OPEC nation after militant attacks shut 340,000 barrels of daily production last week.
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