Crude gains on output forecast; U.S. stocks fall
By Herbert Lash
NEW YORK (Reuters) - Crude oil surged 5 percent on Tuesday after the United States cut output forecasts, while global equity markets mostly rose on expectations the Fed will not raise interest rates this year, though Wall Street fell on slumping biotech stocks.
News that non-OPEC producer Russia and key OPEC member Saudi Arabia discussed the oil market last week helped boost oil prices. The countries plan to continue exchanging views on demand, production and shale oil, Russian Energy Minister Alexander Novak told reporters.
A weakening dollar also added support for oil, while the U.S. Energy Information Administration projected in a monthly forecast that the country's crude output will fall through mid-2016.
"Steeper U.S. production declines over the near term have created a bid for oil prices," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Brent LCOc1, the global benchmark for crude, rose $2.67 to settle at $51.92 a barrel. West Texas Intermediate CLc1, the U.S. crude benchmark, settled $2.27 higher at $48.53.
European shares rallied, extending strong gains from the previous session on expectations the U.S. and European central banks will maintain equity-friendly monetary policy in the coming months.
Large volume in the U.S. stock market's rally on Monday suggests that at least the downside momentum is now broken, said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.
"The markets are playing off the fact that there's a strong likelihood the market has now made a bottom, and we at some point will begin a year-end rally," Bittles said. Continued...