Business

Oil prices surge on OPEC production cut expectations

FILE - In this Oct. 8, 2014, file photo, an American flag flies in front of the New York Stock Exchange in New York. U.S. stocks started slightly lower early Tuesday, Nov. 29, 2016, as the price of oil tumbled almost 4 percent. That took energy companies sharply lower. Health care companies climbed after a strong outlook from UnitedHealth Group. Tiffany jumped after it reported better quarterly results than analysts expected. (AP Photo/Mark Lennihan, File)

FILE - In this Oct. 8, 2014, file photo, an American flag flies in front of the New York Stock Exchange in New York. U.S. stocks started slightly lower early Tuesday, Nov. 29, 2016, as the price of oil tumbled almost 4 percent. That took energy companies sharply lower. Health care companies climbed after a strong outlook from UnitedHealth Group. Tiffany jumped after it reported better quarterly results than analysts expected. (AP Photo/Mark Lennihan, File)

LONDON — Oil prices surged Wednesday on expectations of a production cut from the OPEC cartel of producers. Shares in oil companies rose in the slipstream of higher oil prices, helping indexes around the world to post solid gains.

OIL WATCH: The international benchmark for crude oil, Brent, soared $3.80, or 8.2 per cent , to $50.18 a barrel as oil ministers from the Organization of the Petroleum Exporting Countries seemed to focus less on whether there would be a cut and more on how it would be shared among members. A decision to cut production could have a lasting impact on consumers, as oil price increases feed into the cost of car fuel, heating and electricity. The rate traded in New York was up $3.35, or 7.4 per cent , to $48.65 a barrel.

ANALYST TAKE: "No official announcement has been made yet, but the markets seem convinced about the outcome," said Fawad Razaqzada, an analyst at Forex.com. "The only thing speculators are not too sure about yet is the detail of the deal: who will cut oil production and by how much, and who will freeze and at what levels?"

OIL STOCKS: Higher oil prices mean more revenue for firms extracting oil. Unsurprisingly, oil stocks got a big boost from the higher crude rates in the markets. Britain's BP, for example, saw its share price spike 3.4 per cent , while France's Total rose 1.7 per cent . Spain's Repsol advanced 4.5 per cent and Italy's ENI bounced 3.2 per cent .

STOCK MARKETS: In Europe, France's CAC 40 was up 0.7 per cent at 4,581 while Germany's DAX rose 0.3 per cent to 10,647. The FTSE 100 index of leading British shares was 1 per cent higher at 6,837. Wall Street was poised for modest gains, with Dow futures and the broader S&P 500 futures up 0.3 per cent .

ASIA'S DAY: Japan's benchmark Nikkei 225 was flat, finishing at 18,308.48, and Australia's S&P/ASX 200 dropped 0.3 per cent to 5,440.50. South Korea's Kospi gained 0.3 per cent at 1,983.48 and India's Sensex gained 0.5 per cent to 26,536.49. Hong Kong's Hang Seng gained 0.2 per cent to 22,789.77, while the Shanghai Composite slipped 1 per cent to 3,250.03 on talk regulators might crack down on overseas investments. Shares were higher in Indonesia, Taiwan and Thailand.

CURRENCIES: The euro was down 0.4 per cent at $1.0619 while the dollar jumped 1.1 per cent to 113.45 yen.