Ongoing turmoil pushes oil higher, hurts equities (ISFM) (02-03-2011)

With oil prices advancing once again as uncertainty grows about production and deliveries from Libya, stocks came under a lot of pressure. Fear is also growing that the unrest may spread to other Middle East oil producing countries, and that is intensifying concerns.

By mid morning London time, a barrel of crude on the New York Mercantile Exchange was trading 17 cents higher at $99.80 while the equivalent Brent rate in London rose 61 cents to $116.03. Both rates are now edging up to last week's levels, when the New York rate hit $102 a barrel and the Brent rate neared $120. Spot gold was at $1,427.80 per troy ounce, off $5.40 from its New York settlement Tuesday after recently touching a fresh record high of $1,434.90 per troy ounce.

Earlier in Asia, markets finished lower wish the Middle East unrest sparked sell-off being the main reason, and Japanese shares fell the most so far this year. Losses were spread across the board in the region, and followed the overnight drop on Wall Street. Stocks in Tokyo in particular were hard hit with big losses for banks. Exporters were also lower as fear set in for a decrease in global demand as energy and inflation rose. In China shares also fell as investors consolidated recent.

Stock markets in Europe opened sharply lower as investors continued to worry about the unrest in the Mideast and North Africa and oil hovered just below $100 a barrel. Investors will also be waiting for what if anything the ECB may say tomorrow with regard to inflation and a the possibility of rate hikes.

One hour before the open on Wall Street, U.S. stock futures pared gains after ADP said private employers added 217,000 jobs to their payrolls in February. Although the data was stronger than expected, it was accompanied by a rise in crude-oil futures, which topped 100 dollars a barrel in New York.

Source: ISFM