NEW YORK: Oil prices jumped again Thursday on rising US-Iran tensions, lending support to equity markets despite another round of dreary economic data in the US, Europe and elsewhere.
Iran s Revolutionary Guards warned the US of a “decisive response” after President Donald Trump said Wednesday he ordered the US Navy to destroy Iranian boats that harass American ships in the Gulf.
The back-and-forth led to a second straight big increase for benchmark US crude contract West Texas Intermediate, which gained 20 percent to end at $16.50 a barrel.
The benchmark crude collapsed Monday to an unprecedented low of minus $40.32, reflecting a supply glut that has left the US with little remaining empty crude storage capacity.
Short of halting the world s oil production there is little producers can do to help the price, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“One other option is to fuel geopolitical tensions in the Middle East to threaten supply and support prices. This is what Donald Trump is doing right now,” she said.
Higher oil prices gave a boost to European equity market and played a role in early gains on Wall Street.
Investors largely shrugged off US data showing another 4.4 million workers filed new claims for jobless benefits last week, bringing the total to 26.4 million since mid-March.
And analysis firm IHS Markit said earlier that the eurozone economy has suffered an “unprecedented collapse” as European governments struggled to reach agreement on an economic recovery plan to address the virus damage.
“The ferocity of the slump has… surpassed that thought imaginable by most economists,” IHS Markit chief economist Chris Williamson said.
There also were weak economic reports in Korea and Japan, while the Bank of England warned that Britain was heading for a recession that could be the worst in centuries.
Still, US stocks were strongly positive through late morning, but pulled back following reports that a closely-watched coronavirus drug being developed by Gilead Sciences failed in its first randomized clinical trial.
Gilead fell 4.3 percent following reports that use of antiviral drug remdesivir to treat coronavirus failed in a key clinical trial. Gilead said it is still awaiting data from multiple studies of the drug, which has shown promise in some analyses.
Target fell 2.8 percent after the retail chain cautioned that first-quarter profits would be dented by additional spending on wages, a shift in consumption to lower-profit items and the need to write down the value of apparel and other goods that have not sold well.
