Oil producers set to bring relief from rising prices

An easing of rising oil prices is a possibility if this week’s meeting of the Opec cartel and other producers agree to boost output.

Prices have eased over four successive weeks from more than three-year highs in June. But the impact has been higher outside the US due to a rally in the US dollar on rising interest rates.

Curbs on oil output have been in place since January 2017. This has been exacerbated by the threat of continued sanctions on Iran and reduced production in Venezuela.

US crude futures fell 2.7% on Friday to $US65.06 a barrel while Brent crude, the global oil benchmark, was down 3.3% at $US73.44.

Stocks on Wall Street were mixed and government bond prices jumped last week after the tariff fight between the US and China intensified.

The Trump administration said it would go ahead with a planned imposition of 25% tariffs on $US50 billion of imports from China. Officials in China retaliated immediately with tariffs on a similar value of goods. The tariffs from both countries are set to be imposed in two stages from July 6.

Even as US economic data have been relatively upbeat, with reports last week showing retail sales soaring and jobless claims falling, many fear restrictive trade policies could hit a wide range of industries and derail the global economy.

“For the first four months of the year, all of these threats were there but no one really thought the clouds were going to materialise. Now we’re back to the wall of worry,” AllianceBernstein chief investment officer Jim Tierney says.

Focus on US housing
In the coming week, the focus will be on the US domestic economy. Data on US housing starts in May are due on Wednesday (NZ time), with May home sales the next day. Both are expected to show an increase on the April figures.

Manufacturing numbers from Europe are also due for release. The IHS Markit’s composite purchasing managers index is expected to show a fall to 53.7 in June from 54.1 in May.

European Central Bank president Mario Draghi has called this “a soft patch” in the Eurozone economy. The ECB has signalled interest rates would likely remain unchanged at least through the northern summer of 2019.

The ECB’s move stands in contrast to the US Federal Reserve’s suggestion that it could pick up the pace of interest-rate increases this year and next.

The yield on the benchmark 10-year US Treasury was lower on the week for the third time in the past four at 2.926% from 2.948% on Thursday.

On Wall Street, the blue-chip Dow Jones Industrial Average posted its biggest one-week slide since March. It lost 0.9% over the week to close at 25,090.48.

The S&P 500 rose less than 0.1% for the week to 2779.42 while the Nasdaq Composite added 1.3% for the week to 7746.38, buoyed by gains in the technology sector.