Oil Drops 4% on 2015 Demand Outlook from OPEC, World Markets Slide

Nichole Harper
10 Dec, 2014
New York City

Stocks in New York and in Europe extended two-day losses after crude oil deepened losses on a weak outlook from the OPEC. The 12-member organization estimated world demand for its oil to drop to a 12-year low in 2015.

[R]12:40 PM New York – Stocks in New York and in Europe extended two-day losses after crude oil deepened losses on a weak outlook from the OPEC. The 12-member organization estimated world demand for its oil to drop to a 12-year low in 2015.[/R]

Stocks in New York extended two-day losses after crude oil deepened decline to more than 45% and European markets closed lower on the ongoing political turmoil in Greece.

Crude oil extended two-day losses to more than 7% and prices fell to a new five-year low putting pressure on the price of gold, copper and sugar.

The latest decline in oil price was driven a drumbeat of new forecast of oil price dropping as low as $40 after the OPEC estimated lowest export to world market in 12 years.

The Organization of Petroleum Exporting Countries lowered its estimate of 2015 supply by 300,000 barrels a day to 28.9 million a day.

The estimated decline in OPEC supply is driven by the estimated increase in supply from Canada, Brazil and shale gas production in the U.S.

OPEC estimated demand for its crude to decline to 28.9 million barrels a day, the lowest since the 27.05 million a day mark in 2003.

On Wall Street trading, Tollbooth Index slid 0.4% or 34.76 to 9,936.57.

S&P 500 index slumped 13.44 or 0.6% to 2,046.28 and the Nasdaq Composite Index fell 20.45 or 0.4% to 4,746.09.

Crude oil futures declined 4.8% or $3.05 to $60.75 a barrel and Brent Crude Oil futures fell 4.4% or $2.92 to $63.85 a barrel.

U.S. Movers

Belden Inc ((BDC)) surged 8.3% or $6.24 to $81.16 after the networking service provider agreed to acquire Portland-based privately-held cyber security software developer Tripwire, Inc. for $710 million in cash from Thoma Bravo, LLC.

The deal is expected to close in the first-quarter of 2015.

Costco Wholesale Corporation ((COST)), the discount store operator reported net sales in the first-quarter ending on November 23 climbed 7% to $26.28 billion from a year ago period. Comparable store sales in the quarter jumped 5%.

Net income in the quarter soared 16.7% to $496 million or $1.12 a diluted share compared to $425 million or 96 cents from a same quarter last year.

Toll Brothers Inc ((TOL)), the homebuilder reported revenues in the fourth-quarter ending in October jumped 29% to $1.35 billion from a year ago period.

Net income in the quarter surged 38.6% to $131.5 million or 71 cents a diluted share compared to $94.9 million or 53 cents from a same quarter last year.

The company said average price of homes delivered climbed 6.2% to $747,000 compared to $732,000 in fiscal third-quarter and $703,000 in the same quarter a year ago.

European Markets

In London trading, FTSE 100 index slid 0.29 to 6,529.76 and in Frankfurt the DAX index gained 0.6% or 54.59 to 9,848.30.

In Paris, CAC 40 index rose 0.1% or 4.26 to 4,268.20.

In the European corporate news, Ashtead Group profit surged 27% to £166 million on 23% increase in revenues. BG Group agreed to sell pipeline network of Queensland to APA Group for about £3.2 billion.

Serco won five-year contract worth £1 billion in Australia. Tui AG net swung to profit to €105 million.

Ashtead Group Plc surged 8.7% to 1,171 pence after the U.K.-based industrial equipment provider reported revenues in the first-half ending in October soared 23% to £987.3 million from £849.7 million a year ago period.

Net profit in the period surged 26.7% from a year ago to £165.6 million from £130.7 million and diluted earnings per share jumped to 32.8 pence from 25.9 pence.

BG Group Plc slipped 1.1% to 888.90 pence after the U.K.-based oil and natural gas explorer agreed to sell 543 kilometer in large-diameter underground pipeline network in southern Queensland of Australia to APA Group for about £3.2 billion or $5 billion.

The company plans to use part of the net proceeds to reduce net debt and fund future investment.

The transaction is expected to close in the first-half of 2015.

Tui AG fell 0.6% to €13.52 is a Germany-based travel group said revenues in the year ending in September increased 1.2% to €18.71 billion from €18.48 billion a year ago period.

Net in the year swung to profit from a year ago to €104.7 million compared to a loss of €11.1 million and diluted earnings per share swung to €0.31 from a loss of €0.14.

The travel and tour group is targeting core profit of €1 billion after merge with TUI Travel and the deal is expected to complete on December 17.

The company said it will announce new name of the group next week.

Asian Markets

Market averages in Tokyo plunged 2.2% after investors reacted to the growing political turmoil in the euro zone. Greece is likely to delay its exit from the bailout and may not meet the terms set by the troika of international lenders.

Skymark and ANA may enter into a code share alliance.

Market indexes in Japan closed sharply lower after steady rise in the year and the recent decline in the yen was halted after investors sought the safe haven on the political turmoil in Greece.

Exporters and automakers led the decliners and tire makers also fell despite the recent plunge in oil prices are expected to cut raw material costs.

The Nikkei 225 Stock Average declined 400.80 or 2.2% to 17,412.58 and the broader Topix index dropped 29.26 or 2% to 1,406.83.

The yen slipped 1.7% to 119.04 against one dollar.

In Mumbai trading, the Sensex Index increased 34.09 to close at 27,831.10. The CNX Nifty rose 14.95 to 8,355.65.

Cipla Limited, the pharmaceutical company said its subsidiary sold its 48.2% equity interest in China-based Jiangsu.

Reliance Capital Ltd, the financial service provider sold 16% stake for about Rs 500 crore in Yatra.com.