WASHINGTON - Oil and stock prices surged Friday following reports that oil exporters might work out a deal to cut production, and new data showing stronger U.S. consumer spending.
Crude prices jumped 10 percent or more on global markets after plunging to their lowest level in around 12 years earlier in the week. Brent crude prices rose above $32 a barrel Friday, up from recent price levels below $30 a barrel. U.S. crude prices advanced a similar amount.
Crude prices have been falling because oil supplies exceed demand. Supplies grew because U.S. firms using fracking boosted production, while Saudi Arabia and other major exporters continued high production levels in spite of low prices.
Demand has been slack because economic growth has been slow, and because of widespread energy efficiency improvements prompted by previous high prices.
Investors were encouraged by data showing U.S. retail sales rising in January, evidence that Americans kept spending even though volatile stock and commodity markets have been generating worrisome headlines.
The S&P 500 rose 1.95 percent, the Dow advanced 2 percent, and the NASDAQ rose 1.4 percent in Friday trading.
Britain’s FTSE rose more than 3 percent, while the CAC in France and Germany's DAX jumped about 2.5 percent.
Earlier, key Asian indicators fell, with the NIKKEI off 4.8 percent and Hong Kong’s Hang Seng down more than 1 percent.
The Commerce Department says retail sales rose two-tenths of a percent last month, and new, more complete data prompted them to revise the prior month's sales figures upward.
Economists and investors watch retail sales closely for hints about the consumer demand that drives most U.S. economic activity.
Experts look ahead
Gus Faucher, an economist at PNC Bank, said retail sales figures went up even though plunging gasoline prices reduced the value of sales at service stations. Gasoline prices have fallen seven cents to about 45 cents a liter currently.
He said the "fundamentals for consumer spending are very good," because low energy prices leave consumers with more money to spend, job growth has been averaging over 200,000 per month over the past year, and wages are rising as the labor market tightens.
PNC experts predict the U.S. economy will expand 2.3 percent this year, slightly less than in 2015.
A separate analysis by Wells Fargo bank economists is in general agreement with PNC, and says the latest Commerce Department data likely will translate into very strong consumer demand.