NEW YORK—World oil prices surged to new multi-year peaks on Tuesday, extending their run after OPEC’s latest production decision, while European and US equities rebounded from the prior session’s losses.
US oil futures moved closer to $80 a barrel, a level not crossed since November 2014, after OPEC and other major producers opted on Monday against increasing output by more than previously agreed—despite tightening supplies and rising demand.
The OPEC+ grouping decided to stick with their planned increase next month in oil production of 400,000 barrels.
“OPEC+ gave oil bulls a red rag to bid up futures contracts as it stuck to the planned increase,” said Markets.com analyst Neil Wilson.
“It’s not that demand is suddenly forecast to improve—it’s more that OPEC+ is keeping such a tight grip on supply.”
The latest decision by oil producers also gave a lift to petroleum-linked equities, including BP, TotalEnergies and Chevron, all of which gained one percent or more.
Wall Street stocks enjoyed a much better session overall compared with Monday’s pullback.
Data showed the US services sector grew slightly more than expected in September, while PepsiCo’s results also topped estimates. The strong earnings contrasted with some other recent results disappointments.
“We will see more of this in the next couple weeks,” Maris Ogg of Tower Bridge Advisors predicted of the upcoming earnings season.
“We are going to get some pre-announcements and swing from everything is okay to everything is not okay for the next couple of weeks.”
All three major US indices finished higher, led by the tech-rich Nasdaq, which jumped 1.3 percent.
Markets are still monitoring the difficult political situation in Washington, where partisan gridlock has thus far prevented an effort to raise the debt ceiling and endangered President Biden’s legislative agenda.
Investors were nervously monitoring developments in the crisis surrounding troubled property giant China Evergrande, which has raised warnings about contagion in the world’s number two economy and possibly beyond.