Oil Surges as Saudis Cut Ties With Iran After Embassy Attacked

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Oil advanced for a second day as Saudi Arabia cut ties with Iran a day after its embassy in Tehran was attacked to protest the Saudis’ execution of a prominent Shiite cleric.

Futures rose as much as 3.5 percent in New York, extending Thursday’s 1.2 percent advance. Iran’s Supreme Leader Ayatollah Ali Khamenei warned of repercussions and protesters armed with rocks and firebombs attacked the Saudi embassy in Tehran on Saturday and set parts of the building on fire.

Saudi Arabia and Iran, respectively OPEC’s first- and fifth-ranked producers, are on opposite sides of Middle East conflicts from Syria to Yemen. Prices last week capped the biggest two-year loss on record amid speculation a global glut will be prolonged as U.S. crude stockpiles expanded at a record rate and the Organization of Petroleum Exporting Countries abandoned output limits.

West Texas Intermediate for February delivery climbed as much as $1.28 to $38.32 a barrel on the New York Mercantile Exchange and was at $38.03 at 8:27 a.m. Hong Kong time. The contract rose 44 cents to $37.04 on Thursday. The volume of all futures traded was about double the 100-day average. Prices lost 11 percent in December for a second monthly decline.

Source: Bloomberg

Gold Futures Lower, Eyeing Weekly, Monthly, Yearly Loss

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February gold was $1.80, or 0.2%, lower at $1,058.20, after ending the previous session at its lowest level in about two weeks. The yellow metal is on pace to cap the week with a 1.5% drop, along with a 0.5% decline in December and a withering 10.5% decline for the year, according to FactSet data.

Gold has declined for three straight years, starting back in 2013. That is the longest streak of annual losses for the metal since 1996, FactSet shows.

Gold’s sister metal, silver, didn’t fare much better. March silver is off a penny Thursday, or less than 0.1%, at $13.84 an ounce. The gray metal is on track to end the week with a 3.8% weekly decline, a 1.8% monthly fall and an annual drop of 11.3%.

The bruising year for metals comes amid a broader commodity rout sparked by worries about the health of China–the world’s second largest economy and the largest importer of metals.

A rise in the dollar which has gained 9.1% in 2015, also weighed on dollar-denominated metals, making them less appealing to buyers using other monetary units.

Source: MarketWatch

Yen Near Two-Month High as Saudi-Iran Tension Fuels Haven Demand

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The yen traded near a more than two-month high to start 2016 amid demand for haven assets as tensions escalated between Saudi Arabia and Iran after the execution of a prominent Shiite cleric.

Japan’s currency held its biggest monthly gain versus the dollar since January 2014 after Saudi Arabia cut diplomatic ties with Iran following an attack by protesters on its embassy in Tehran. Concern that China’s economy remains anemic added to risk aversion after a fifth month of contraction in factory activity.

The yen traded at 120.26 per dollar as of 8:46 a.m. in Tokyo, after earlier reaching 120.04. It touched 120.01 on Dec. 31, the highest since Oct. 22, rising 2.4 percent over the month. Japan’s currency was at 130.53 per euro.

Source: Bloomberg

Asian Stocks Decline as Investors Weigh Tension in Middle East

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Asian stocks fell after Saudi Arabia’s severing of diplomatic ties with Iran weighed on risk appetite, while a surge in crude oil boosted energy producers.

The MSCI Asia Pacific Index slid 0.3 percent to 131.57 as of 9:01 a.m. in Tokyo. The yen traded near the highest in more than two months, dragging shares in Tokyo lower. Energy shares advanced after Saudi Arabia expelled the Islamic Republic’s diplomats from the country following an attack on its embassy in Tehran to protest the Saudis’ execution of a prominent Shiite cleric. The move marks the worst crisis in relations between the nations since the late 1980s.

Asian shares are trading for the first day of 2016 after posting back-to-back annual losses. Brent crude tumbled 35 percent last year and the Bloomberg Commodity Index slumped 25 percent amid an oil supply glut and as Chinese economic growth slowed, pressuring equity markets and corporate profits.

Source: Bloomberg

Japanese Stocks Fall as Investors Weigh Tension in Middle East

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Japanese stocks fell on the first trading day of the year as the yen traded near the highest in more than two months and investor appetite waned for risky assets after Saudi Arabia cut diplomatic ties with Iran.

The Topix index declined 0.9 percent to 1,533.78 as of 9:01 a.m. in Tokyo as tire makers led losses, while energy explorers rose. The index climbed 9.9 percent last year, its fourth straight year of gains. The Nikkei 225 Stock Average lost 1 percent to 18,838.87. The yen traded at 120.31 per dollar as crude oil surged after Saudi Arabia expelled the Islamic Republic’s diplomats from the country following an attack on its embassy in Tehran to protest the Saudis’ execution of a prominent Shiite cleric. The move marks the worst crisis in relations between the nations since the late 1980s.

West Texas Intermediate crude rose 2.4 percent on the first trading day of the year after tumbling more than 30 percent in 2015. Saudi Foreign Minister Adel al-Jubei announced the expulsion of Iran’s diplomats after Iranian protesters set the Saudi embassy on fire following the execution of Nimr al-Nimr, a critic of the kingdom’s treatment of its Shiite minority.

Source: Bloomberg