Oil markets surge as corporate stocks gets boost from JP Morgan's results

Signs of stabilisation in China's economy and a weaker dollar helped oil markets to their best run in more than three years on Friday, while global stocks edged up after JP Morgan's results began the corporate earnings season in style.

Chinese data showed exports rebounded last month, helping to offset weaker imports and reports of another reduction in Germany's growth forecasts. Turkey's lira was back on the ropes amid worries about its trajectory. The euro gained despite the German growth concerns. Dealers were gearing up for demand from Japan as Mitsubishi UFJ Financial closed in on its multi-billion-euro acquisition of DZ Bank's aviation-finance business.

European markets shook off another slow start, as did Wall Street futures after strong earnings at JPMorgan drove shares of European and U.S. banks higher. The earnings season's opening is likely to divert attention from the ongoing U.S.-China and U.S.-Europe trade war.

BLACK GOLD'S SPARKLING 2019 START

Oil provided the big milestones. Brent was at $71.4 a barrel, having broken back through the $70 threshold this week, and U.S. WTI was heading for a sixth straight week of gains for the first time since early 2016. Involuntary supply cuts in Venezuela, Libya and Iran have supported perceptions of a tightening market, already constrained by production cut from OPEC and its allies.

"We expect oil price to eventually move higher in Q2 as OPEC+ potentially runs the risk of over-tightening the market by maintaining its current course of action," Harry Tchilinguirian, strategist at BNP Paribas, told the Reuters Global Oil forum. Commodities have had the best first-quarter start ever, Bank of America Merrill Lynch analysts said, calling the annualised returns they are tracking the strongest in the past 100 years.

Taking advantage of strong prices and subdued valuations for oil producers, Chevron picked up Anadarko Petroleum Corp for $33 billion.

SUBDUED SESSION

Despite a subdued Asia session, Chinese blue chips managed to recover and close nearly flat. Higher Chinese iron ore prices helped push Australia up 0.85 per cent. Japan's Nikkei gained, too. "The Chinese data was a little mixed, but the money supply numbers were a positive impulse overall," said TD Securities Senior Global Strategist James Rossiter.

In bond markets, Germany's 10-year government yields reached three-week highs as investors cheered the rebound in Chinese exports, which gave hope that the global economic outlook is not as bad as expected. The move in German bonds ignored a report by Der Spiegel magazine that Berlin was set to halve its economic growth forecast for 2019, to 0.5 per cent from 1.0 per cent.

That would be more pessimistic than the current 0.8 per cent estimate from Germany's leading economic institutes. Worries about European growth also made the European Central Bank cautious at a policy meeting earlier this week. Britain's sterling rose after British finance minister Philip Hammond said he expects a Brexit deal in the next couple of months.

Christine Lagarde, International Monetary Fund managing director, said on Thursday that the six-month delay in Britain's exit from the European Union avoids the "terrible outcome" of a no-deal Brexit, although it did nothing to lift uncertainty over the final outcome. Gold crept higher after falling more than 1 per cent on Thursday to break below $1,300 following solid U.S. data. Spot gold traded at $1,292.41 per ounce.

(With inputs from agencies.)