Oil up on supply disruptions, stocks rise

By Rodrigo Campos

NEW YORK (Reuters) - Crude futures hit a six-month high on Monday as output disruptions were expected to cut into a long-standing glut in the market, while higher commodity prices boosted basic materials and energy shares.

The benchmark U.S. Treasury yield rose after matching a one-month low hit Friday and the dollar ticked lower, caught between a weaker yen and a stronger euro.

Supply disruptions in Nigeria, Canada and Venezuela have most likely pushed oil production below consumption levels in May for the first time in at least two years. That means the world has started eating into the huge stockpiles of oil that knocked as much as 70 percent off crude prices between 2014 and early 2016.

 

The energy sector led Wall Street higher after the S&P 500 closed Friday its third straight week of losses. Apple , up 3.60 percent at $93.78 after Warren Buffett disclosed a near $1 billion stake, also gave U.S. stocks support.

News of Buffett's Apple stake and higher oil prices were the main drivers of the stock market, said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

He said he expects the boost to stocks to last through the whole session.

The Dow Jones industrial average <.DJI> was up 156.42 points, or 0.89 percent, to 17,691.74, the S&P 500 <.SPX> had gained 17.99 points, or 0.88 percent, to 2,064.6 and the Nasdaq Composite <.IXIC> had added 54.19 points, or 1.15 percent, to 4,771.87.

The pan-European FTSEurofirst 300 share index <.FTEU3> closed down less than 0.1 percent. Volume was constrained with the Frankfurt Stock Exchange among European bourses closed for a holiday.

MSCI's gauge of stocks across the globe <.MIWD00000PUS> rose 0.64 percent.

Oil prices rose sharply, partly after Goldman Sachs said disruption to supply had seen the market flip into deficit and U.S. crude could trade as high as $50 per barrel in the second half of 2016.

Brent crude hit $49.47 per barrel, its highest price since early November. The international benchmark, which has risen nearly 80 percent from lows touched in January, last traded at $48.86, up 2.2 percent on the day.

U.S. crude was up 3 percent at $47.59.

The yen > edged down 0.38 percent to 109.01 per dollar and the euro > rose 0.15 percent to $1.1322. The greenback was marginally lower against a basket of major currencies <.DXY>, having touched a three-week high on Friday.

U.S. Treasury yields rose as prices fell despite a weaker-than-expected reading in the New York Fed manufacturing survey, as traders focussed on the gains in the oil market.

"A lot of the overnight data has been kind of weak and people have just roundly ignored it," said Aaron Kohli, interest rates strategist at BMO Capital Markets in New York.

"Everyone was just focussing on crude this morning."

The U.S. 10-year yield > fell 12/32 in price to yield 1.7464 percent, compared to 1.7050 late on Friday.

Irish yields > touched the lowest in more than a month after Moody's Investor Services raised its credit rating to A3 from Baa1. It maintained a positive outlook on Ireland, which entered a three-year international bailout in 2011.

"The upgrade by Moody's expands the range of potential buyers of Irish bonds. Some investors, particularly in Asia require a minimum 'A' grade from all of the three big agencies," Cantor Fitzgerald strategist Ryan McGrath said.

Copper rose 0.5 percent to $4,652 per tonne, having hit a near three-month low on Friday.

Spot gold > was little changed at $1,272.93 an ounce.

(Reporting by Rodrigo Campos, additional reporting by Tanya Agrawal and Dion Rabouin; Editing by Bernadette Baum and Nick Zieminski)