Energy stocks lead an early rally as price of crude oil surges

Asian stocks rallied Friday, extending a global market rebound fueled by the prospect of more stimulus from European policymakers and a bounce in oil prices.

“They are just the most conservative sector of the stock market”, he said.

Energy stocks are leading an early rally on Wall Street as the price of crude oil surges.

The Dow Jones industrial average rose 210.83 points, or 1.3 percent, to 16,093.51. The Nasdaq composite picked up 57 points, or 1.3 percent, to 4,528. USA benchmark crude rose $1.11 to $30.62 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for worldwide oils, rose $2.93, or 10 percent, to $32.18 a barrel in London.

Oil prices recovered from earlier losses and were sharply higher. Its shares have dropped 42 percent in 2016 after huge plunges the previous two years. Heating oil jumped 5 cents, or 5.6 percent, to 91 cents a gallon.

ENERGY STOCKS: Pipeline operator Kinder Morgan rose $1.48, or 10.7 per cent, to $15.36 after it jumped 15 per cent Thursday. Natural gas gained 4 cents, or 1.7 percent, to $2.15 per 1,000 cubic feet. That lifted energy companies, which have been struggling as energy prices tumble. “It’s become harder and harder for stimulus to really support the economic fundamentals so it doesn’t mean a medium- and long-term change, but at least we have a bit more stable trading environment for a couple of days”. The price of oil also recovered from a big decline.

Southwestern Energy said it will cut 1,100 jobs, or about 44 percent of its workforce, as the oil and gas company deals with a drop in prices.

Low energy prices are good for many industries and consumers, but investors have gotten nervous that falling energy prices foretell a big slowdown in the global economy.

European markets also rose on hopes the European Central Bank will do more to aid the region’s economy.

Japan’s Nikkei 225 soared 5.3 percent to 16,863.76 on hopes the Bank of Japan would join Europe in promising further monetary stimulus.

South Korea’s Kospi gained 2.1 per cent and Hong Kong’s Hang Seng added 2.9 per cent. The Shanghai Composite Index in mainland China climbed 1.3 per cent.

On Friday European Central Bank head Mario Draghi said the bank has a lot of options to boost inflation and is determined and willing to act.

At a news conference Thursday, Draghi underlined his willingness to expand existing stimulus efforts, saying several times that there was “no limit” to measures it might take.

OVERSEAS: Britain’s FTSE 100 rose 1.8 percent, Germany’s DAX climbed 1.9 percent and France’s CAC gained 2 percent. Stocks have been pummeled in 2016 as investors worry about the global economy. Past year the S&P 500 utility index fell 8 percent and telecom stocks fell 2 percent.

Airline stocks have slumped in early 2016 as investors fear that cheap fuel will encourage airlines to add too many flights, creating a glut of seats.

Telecommunications and utilities stocks also rose and turned positive for the year. The other eight industrial sectors in the S&P 500 are all much lower in 2016.

For the week, the Dow rose 0.7 percent, the S&P 500 climbed 2 percent and the Nasdaq increased 2.3 percent. AT&T shares rose 85 cents, or 2.5 percent, to $34.75. The stock lost $5.06, or 6.9 percent, to $68.53.

American Express sank 12 percent after issuing a weak earnings forecast for this year and next. Its stock fell $6.09, or 9.7 per cent, to $56.55.