San Francisco Frontiers - Oil prices dive on weaker IMF growth forecast as US stocks rally

The catalyst for the drop in both Brent and West Texas Intermediate futures was the IMF sharply downgrading its 2022 global growth forecast to 3.6 percent, 0.8 percentage points lower than its previous estimate released in January.

Energy prices are surging, debt levels are rising and shortages remain acute, the IMF noted, as multiple crises including the Ukraine war and coronavirus pandemic fuel an acceleration of inflation.

"The economic effects of the war are spreading far and wide -- like seismic waves that emanate from the epicenter of an earthquake," IMF chief economist Pierre-Olivier Gourinchas said in the report.

The downgrade was sharper for the eurozone, which is now expected to grow by 2.8 percent instead of 3.9 percent.

The report projected US growth would be 3.7 percent, down 0.3 percent from the earlier outlook.

While European bourses pulled back, US stocks enjoyed a buoyant session, rallying after a tepid open.

The broad-based S&P 500 finished up 1.6 percent.

Analysts cited better-than-expected US housing starts data, as well as solid earnings from Johnson & Johnson and other companies.

Much of the strength also stemmed from the positioning of the market.

"It's a nice reflex rally from an oversold position," said Art Hogan, strategist at National Securities, who said the dynamics reflected a "pretty oversold market."

Still, markets remain focused on the shifting monetary policy outlook as the yield on the 10-year US Treasury note climbed above 1.9 percent.

Airline shares were solidly higher after many US carriers lifted mask requirements following a ruling from a federal judge that struck down the nationwide face-covering mandate on transportation. American Airlines, Delta Air Lines and Southwest Airlines all won at least two percent.

But Lockheed Martin lost 1.6 percent after reporting that profits and sales dipped as the defense giant cited the drag from Covid-19 restrictions on its supply chain.

- Key figures around 2050 GMT -

New York - Dow: UP 1.5 percent at 34,911.20 (close)

New York - S&P 500: UP 1.6 percent at 4,462.21 (close)

New York - Nasdaq: UP 2.2 percent at 13,619.66 (close)

London - FTSE 100: DOWN 0.2 percent at 7,601.28 points (close)

Frankfurt - DAX: DOWN 0.1 percent at 14,153.46 (close)

Paris - CAC 40: DOWN 0.8 percent at 6,534.79 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,830.76 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 26,985.09 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,194.03 (close)

Hong Kong - Hang Seng Index: DOWN 2.3 percent at 21,027.76 (close)

Dollar/yen: UP at 128.89 yen from 126.69 yen

Euro/dollar: UP at $1.0796 from $1.0782

Pound/dollar: DOWN at $1.2998 from $1.3019

Euro/pound: UP at 82.98 pence from 82.85 pence

Brent North Sea crude: DOWN 5.2 percent at $107.25 per barrel

West Texas Intermediate: DOWN 5.2 percent at $102.56 per barrel

burs-jmb/cs

A.Clark--SFF