Oil prices near six-month highs as stock markets retreat

LONDON: Oil prices closed in on six-month highs Thursday amid supply concerns stoked by the United States tightening the screws on sanctions-hit Iran.

Stock markets meanwhile mostly dropped, with European traders digesting news of the collapse of two mega-mergers in the supermarket and banking industries.

Wall Street meanwhile opened mixed amid a raft of US corporate giants releasing earnings reports, including positive news from Microsoft and Facebook.

"Brent crude oil has rallied above $75 a barrel for the first time this year on the back of tighter sanctions on Iran, while gains in West Texas Intermediate (WTI) have been curtailed by a surge in US supply," noted Dean Popplewell, markets analyst at Oanda trading group.

Brent North Sea crude for delivery in June jumped to $75.60 per barrel, the highest level since the end of October, before falling back slightly.

West Texas Intermediate (WTI) prices reached $66.28 per barrel -- just 0.03 cents away from its own six-month high -- before it dropped.

The US removal this week of waivers that allowed countries to buy oil from sanctions-hit Iran is expected to hit supplies, though analysts are keeping watch on the region and whether OPEC responds by opening up the taps.

Oil prices had already enjoyed a strong recovery this year, with output capped by Russia and the OPEC cartel as well as unrest in Venezuela and Libya.

Oil kingpin Saudi Arabia on Wednesday said it had no immediate plans to raise oil output to offset the move by Washington.

Iran's supreme leader Ayatollah Ali Khamenei called the end of oil sanction waivers by the US a "hostile measure" that "won't be left without a response".

- Mergers collapse -

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In the stock markets, Asian equities stuttered after New York indices retreated Wednesday from record highs, with weak economic data around the world offsetting a forecast-beating earnings season.

While the mood on trading floors remains broadly positive after a blockbuster start to the year, there are lingering concerns that growth in most parts of the world is well off the pace of the United States.

There was further negativity in Asia, with South Korea on Thursday reporting its biggest quarterly contraction since late 2008. The 0.3 percent drop was also its first fall since the last three months of 2017.

The data comes after investors have been on a buying spree for much of the year, fuelled by optimism that China and the US will hammer out a deal to end their trade war, as well as central bank dovishness.

Shanghai was the main loser Thursday, ending down 2.4 percent on concerns the Chinese government could ease up on a recent run of mini stimulus measures that have supported the economy and equities.

European stock markets were solidly down, with shares in Deutsche Bank flattened and Commerzbank dropping 2.7 percent after Germany's two biggest lenders ended merger talks.

British supermarket Sainsbury's meanwhile slid 4.4 percent after the UK's competition watchdog blocked its proposed merger with Walmart-owned Asda.

In foreign exchange news, the euro dropped to $1.1118, its lowest level since June 2017, before rebounding slightly.

"The euro is cheap, dragged down by weak growth, political uncertainty and two-year bond yields that are even lower than Japan's," said Kit Juckes, macro strategist at French bank Societe Generale.

- Key figures around 1340 GMT -

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Oil - Brent Crude: UP 35 cents at $74.92 per barrel

Oil - West Texas Intermediate: DOWN 14 cents at $65.74 per barrel

London - FTSE 100: DOWN 0.8 percent at 7,413.79 points

Frankfurt - DAX 30: DOWN 0.4 percent at 12,265.62

Paris - CAC 40: DOWN 0.5 percent at 5,546.29

EURO STOXX 50: DOWN 0.6 percent at 3,482.60

Tokyo - Nikkei 225: UP 0.5 percent at 22,307.58 (close)

Hong Kong - Hang Seng: DOWN 0.9 percent at 29,549.80 (close)

Shanghai - Composite: DOWN 2.4 percent at 3,123.83 (close)

New York - Dow: DOWN 0.8 percent at 26,378.16

Euro/dollar: DOWN at $1.1141 from $1.1156 at 2200 GMT

Pound/dollar: DOWN at $1.2893 from $1.2902

Dollar/yen: DOWN at 111.70 yen from 112.13 yen