New York : Stocks in major markets rallied and crude oil prices eased yesterday after Saudi Arabia boosted oil output to calm fears of supply disruptions sparked by the uprising in Libya.
The Saudi move to increase oil output by more than 700,000 barrels daily, according to an industry source familiar with the kingdom's production, offset a bearish US government report that showed slower than expected fourth-quarter economic growth.
The US dollar trimmed gains versus the euro and extended losses against the yen after a second estimate of US gross domestic product data for the fourth quarter of 2010.
US GDP grew at annualised rate of 2.8 per cent, less than an initial 3.2 per cent estimate as government spending contracted more sharply and consumer spending was less robust, the Commerce Department said.
Spotlight
Events in North Africa and the Middle East still grabbed the spotlight though after oil prices retreated from two and a half year peaks of almost $120 a barrel on Thursday.
Saudi Arabia has quietly increased its production to more than 9 million barrels per day (bpd), a senior industry source familiar with Saudi production told Reuters yesterday.
"We have started producing over 9 million barrels per day. We have a lot of production capacity," the source said.
ICE Brent crude futures in London were up 40 cents at $111.72 a barrel. US light sweet crude oil fell 8 cents to $97.20 a barrel. Earlier last week Brent prices had spiked to nearly $120 a barrel and US crude oil had risen over $100.
Panic subsides
"The tensions in the Middle East seem to be less at the forefront of the market's mind. The initial panic seems to have subsided a bit," said Phil Gillett, a trader at Spreadex.
Wall Street opened higher, in line with higher equity markets in Europe. The FTSEurofirst 300 index of top European shares was up one per cent and world equities measured by MSCI's all-country world index rose 0.8 per cent.
The Dow Jones industrial average was up 33.11 points, or 0.27 per cent, at 12,101.61. The Standard & Poor's 500 Index was up 5.73 points, or 0.44 per cent, at 1,311.83. The Nasdaq Composite Index was up 16.12 points, or 0.59 per cent, at 2,754.02.
Gold rose, supported by interest in the metal as a haven from risk amid the backdrop of violence in Libya.
Businesses are becoming cautious across the Middle East and not taking major investment decisions as many believe the political uprisings like in Egypt, Tunisia, Yemen, Libya and Bahrain may alter the strategic balance in the region.
"What is happening is, of course, affecting the business sentiments in other countries in the region. People are apprehensive," Adeeb Mohammad Edrees, a Riyadh based businessman, told IANS.
Edrees, general manager of Green Emerald, a company with major interests in investment, trading and diversified manufacturing, said most businesses, especially foreign firms, were watching developments anxiously and keeping new projects or expansion on hold.
