Oil prices fell back yesterday while the prices of precious metals surged as markets registered a mild and mixed reaction to the US capture of Venezuelan President Nicolas Maduro in a weekend raid.
“While the capture of Venezuelan President Maduro by American forces has dominated headlines, financial markets seem unperturbed,” Capital Economics Ltd Asia-Pacific markets head Thomas Mathews said in a report. “We agree with the implicit view that the near-term economic and financial implications are minor.”
Shortly after trading began, US benchmark crude oil rose slightly, but it ended US$0.52 lower at US$56.80 per barrel. Brent crude, the international standard, gave up US$0.49 to US$60.26 per barrel.
Photo: Reuters
After years of neglect and international sanctions, Venezuela’s oil industry is in disrepair and the country’s output now represents less than 1 percent of global supplies, which is mostly exported to China. It could take years and major investments before production could increase dramatically.
Some analysts expect Venezuela could double or triple its output of about 1.1 million barrels of oil a day to return to historic levels quickly.
With oil levels already plentiful, crude already was trading near its lowest level in about six months. The market is facing a big surplus this year, as OPEC+ and others add more barrels as demand softens.
OPEC+ stuck with plans to pause supply hikes in the first quarter. The group, led by Saudi Arabia and Russia, did not discuss Venezuela during the 10-minute video conference, delegates said adding that it was premature to gauge how to respond to the unfolding situation.
Meanwhile, the price of gold rose 2.4 percent and silver jumped 6 percent. Such assets are often considered safe havens in times of geopolitical turmoil.
The US dollar advanced against all major peers, and the artificial intelligence (AI) trade saw Asian and European stocks gain ground. NASDAQ 100 futures rose 0.7 percent, while those for the S&P 500 were up 0.3 percent.
“The economic impact of what happened in Venezuela is too small to weigh on equity markets,” Pictet Asset Management Ltd senior investment adviser Christopher Dembik said.
The buoyant mood in equities was most prevalent in Asia as a regional gauge rose 1.6 percent to a record. Chipmakers such as Samsung Electronics Co and Taiwan Semiconductor Manufacturing Co (台積電) were among the biggest winners, soaring 7.47 percent and 5.36 percent respectively. Technology stocks led gains in Europe, too.
AI “absolutely stays the most dominant factor in the markets right now,” Saxo Markets chief investment strategist Charu Chanana said. “Tech optimism continues to overpower any of the other narratives in the markets.”
Additional reporting by Bloomberg
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