Oil Prices Drive Energy Stocks Higher, EWU at 1% Gain



EWU rose 1%

The UK stock markets were bright on Wednesday, October 28, ahead of the FOMC’s (Federal Open Market Committee) interest rate policy statement announcement after market hours. Of the 109 constituent stocks of the iShares MSCI United Kingdom ETF (EWU), 90 stocks ended up in positive territory.

A fresh stimulus in the Eurozone was already assured in the region. The markets also expected the Fed not to change the interest rate in October 2015. This expectation of low interest rates made gold more attractive, sending gold prices high on October 28.

With rising gold, gold miners such as Randgold Resources (RRS) and Fresnillo (FRES) rose 3.8% and 4.6%, respectively, on October 28. Other miners such as Glencore (GLEN), BHP Billiton (BHP), and Anglo American (AAL) rose 3.0%, 0.6%, and 1.0%, respectively, on that day.

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Rise in oil price upsurged energy stocks

The following graph shows the performances of the energy stocks, namely, BP (BP) and Royal Dutch Shell (RDS.A) (RDS.B), since August 2015.

Oil led the rally in energy stocks that took place on October 28. That day, the EIA (U.S. Energy Information Administration) reported that crude oil supplies for the week ended October 23 were lower than the forecast inventories. The current inventory status of 3.4 million barrels compared to the prior buildup of 8.0 million barrels was perceived as much less than the expected crude oil supplies. This cut in inventory growth and a moderate refinery demand for oil propelled oil prices higher that day. Stocks of Tullow Oil (TLW), Amec Foster Wheeler (AMFW), and Petrofac (PFC) rose 6.8%, 4.1%, and 3.5%, respectively, on October 28.

Next, let’s look at the key stocks of the iShares MSCI United Kingdom (EWU) on October 28.


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