An attack on the oil facilities of Saudi Arabia’s state oil producer on Saturday has forced the country to freeze a large portion of its production, temporarily removing as much as 5% of global oil output from circulation.
Brent crude spiked 20% over the weekend in a move exaggerated by thin late Sunday trade but liquidity has picked up since the London market opened and the price settled at around $65.60 rather than the $72 seen over the weekend.
More price shocks could be in the offing, particularly after President Trump said that the US is 'locked and loaded', waiting to hear from Saudi Arabia on their views about the party behind the attack.
Not much surprise then that oil and utility companies are rallying in London as is BAE Systems (LON:BAES), the UK defence manufacturer. Still, overall the FTSE is trading lower, weighed down by struggling investment firms and airlines.
China economic data upsets Asian markets
Asian markets proved equally cautious, upset more by comments from the Chinese Premier than the rally in oil prices. Premier Li Keqiang warned that it will be very difficult for China to grow at 6% or more this year given the current state of the global economy and his predictions were further borne out by the country’s industrial production data which was released later and showed a slowdown to the slowest rate since the early 1990s of only 4.4%, significantly below expectations of 5.2%.
UK September house prices slip
Brexit turmoil has squeezed UK house sellers into a corner, causing prices to slip by a small margin in a move that is very untypical for September when prices normally rally after the market gets back into full swing following summer holidays. However, buyers remain hesitant while the political situation remains unresolved causing September prices to drop on an annual basis for the first time in nine years.
With the Parliament closed for the next few weeks and speculation about possible outcomes when it reopens reaching fever pitch, there is little to support the pound in the meantime. Sterling has slipped nearly half a percent against the dollar and is weaker 0.36% against the common currency; there are no signs that there will be any turn around in this trend for the moment.
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