Supply disruptions boost oil; stocks rise

Mon May 16, 2016 4:25pm EDT
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By Rodrigo Campos

NEW YORK (Reuters) - Crude oil futures hit a six-month high on Monday as output disruptions were expected to cut into a long-standing glut in the market, while stocks rose sharply, boosted by basic materials and energy shares.

The benchmark U.S. Treasury yield rose after matching a one-month low hit Friday and the dollar ticked lower, caught between a weaker yen and a stronger euro.

Supply disruptions in Nigeria, Canada and Venezuela have most likely pushed oil production below consumption levels this month for the first time in at least two years. That means the world has started eating into the huge stockpile of oil that has knocked as much as 70 percent off crude prices between 2014 and early 2016.

The energy sector led Wall Street higher following a third-consecutive week of declines on the S&P 500.

"Oil is the catalyst but the move today wouldn't have been this big if stocks had not been this weak lately," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

He said the move in oil and other commodities "is creating a sense that there's a shot this rally could get some legs… and people hate to miss out."

The Dow Jones industrial average .DJI rose 175.39 points, or 1 percent, to 17,710.71, the S&P 500 .SPX gained 20.05 points, or 0.98 percent, to 2,066.66 and the Nasdaq Composite .IXIC added 57.78 points, or 1.22 percent, to 4,775.46.

Apple (AAPL.O: Quote), up 3.7 percent at $93.88 after Warren Buffett disclosed a near-$1 billion stake, also gave U.S. stocks a boost.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 16, 2016.  REUTERS/Brendan McDermid