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US stocks end higher as oil prices near $48 on supply disruption estimates

US stocks advance, largely thanks to oil prices near $48 a barrel on oil supply disruption expectations, as well as Warren Buffett's confidence in Apple shares

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A new dawn for oil prices?

US stocks advanced on Monday, largely thanks to oil prices near $48 a barrel on oil supply disruption expectations, as well as Warren Buffett's confidence in Apple shares (NASDAQ:APPL).

The bellwether A&P 500 index closed up 0.98% at 2,066, while the S&P Midcap 400 ended up the same, at 1,454. The S&P Smallcap 600 finished up 1% at 684, while the broader small-cap ticker Russell 2000 ended the session up 1.25% at 1,116.

The energy sector led Wall Street higher following a third-consecutive week of declines on the S&P 500.

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

The US oil benchmark West Texas Intermediate closed up 3.55% at $47.85. Earlier the futures contract hit just shy of $48 at $47.98.

Meanwhile, it transpited from a 13F filing with the SEC made on Friday that Buffett's investment vehicle bought $1.1bn-worth of Apple stock in a big bet on the recently challenged firm. Apple shares ended up 3.7% at $93.88.


Midsession

US stocks were higher at midsession on Monday, after crude oil prices hit a fresh six-month high, and received an indirect boost after Apple Inc (NASDAQ:APPL) shares were lifted on news that investor Warren Buffett's Berkshire Hathaway backs the computer giant.

The bellwether S&P 500 was up 0.9% at 2,065.

According to a 13F filing with the SEC on Friday, Buffett's investment vehicle bought £1.7bn-worth of Apple stock in a big bet on the recently challenged firm. Apple shares were up 3.6% at $93.76.

Crude futures hit a six-month high on Monday as output disruptions were expected to eat into a long-standing glut in the market, while higher commodity prices boosted basic materials and energy shares. The US benchmark West Texas Intermediate was up 3% at $47.60 having earlier hit $47.85 - its highest since the start of November.

The S&P Midcap 400 was 1% at 1,445, led by construction machinery group Terex Corp (NYSE:TEX) up 10.2% at $24.99 after  Finland's Konecranes (HEL:KCR1V ) said it will buy the company's crane business for ports and factories for 1.13bn euros ($1.28bn) in cash and shares, and oil-led Denbury Resources (NYSE:DNR) up 7.44% at $4.19 and Energen Corp (NYSE:EGN) up 6.8% at $45.04.

The S&P Smallcap 600 was up 1.1% at 684, led by stocks such as Newpark Resources (NYSE:NR), up 7.8% at $4.69


Open

Shares have defied pre-opening expectations of a slightly lower and roused themselves, spurred on by a resurgent oil price.

The blue-chip benchmark, the S&P 500, was eight points firmer at 2,054 after around 45 minutes' trading while its mid-cap counterpart, the S&P 400, was 10 points better at 1,451.

Further down the food chain the Russell 2,000 index, which tracks small-caps, was eight points higher at 1,110.

The price of West Texas intermediate, the US crude benchmark, was 3.1% higher on the day at $47.62 a barrel, lifting energy company stock prices with it.

A spot of merger activity has added a bit of spice to proceedings, with Gannett Co Inc (NYSE:GCI), the publisher of USA Today, upping its offer for Chicago Tribune publisher Tribune Publishing Co (NYSE:TPUB) to $15 a share from $12.25 previously, while Anacor Pharmaceuticals Inc (NASDAQ:ANAC) has succumbed to an offer from drugs giant Pfizer Inc (NYSE:PFE).

Tribune Publishing is still trading below Gannett's offer price, at just over $14, but it is the top riser on the NYSE, up 22.4%.

Anacor Pharmaceuticals has surged 54% to $98.90 and is the third best riser on Nasdaq.

Top of the Nasdaq tree is Nanosphere Inc (NASDAQ:NSPH), the molecular diagnostics specialist, in yet another bid situation.

Its shares rose 69% to $1.32 as it agreed to a $1.35 a share offer from Luminex Corporation (NASDAQ:LMNX), which rose 1.2%.

The agreed bid overshadowed Nanosphere's results, which showed a sharp rise in total revenue to $6.59mln from $4.62mln the year before, though it remained loss-making, with a net loss of $6.57mln, which was at least a narrower loss than last year's $7.53mln.

Pre-open

After Friday's shake-out, investors look set to start the week quietly licking their wounds, after some indifferent economic data from China.

Ahead of the release on Wednesday of the minutes from the most recent meeting of the central bank's policy makers, the Dow Jones is tipped to open five points or so lower after shipping 185 points on Friday.

The broader-based S&P 500 fell 18 points on Friday and if spread-betting quotes are to be believed it is set to open just a smidgen lower today.

Although sentiment is likely to be affected by Chinese economic indicators for investment, factory output and retail sales figures released on Saturday all undershooting expectations, an uplift in oil prices is likely to offer support.

“Oil has also been range-bound for a while now but it seems that a suggestion by Goldman Sachs that the oil market is no longer oversupplied due to a number of supply disruptions and bankruptcies in the US, has propelled prices to a six month high. The next key level for Brent will be around $51-51.50, while $48.50 in WTI may offer some resistance,” said Craig Erlam at forex trading platform operator OANDA.

On the other hand, this morning's Empire State general business conditions index for May did nothing to encourage the bulls. The index moved nine points into negative territory after a +9.6 reading in April.

Orders and shipments both lapsed into the red in May.

On the corporate front, there has been a good deal of interest in news that legendary investor Warren Buffett has used his investment vehicle Berkshire Hathaway Inc (NYSE:BRK.A) has bought 9.8mln shares in iPhone maker Apple Inc (NASDAQ:AAPL).

The shares were purchased at an average price of around $109 a share.

Shares in Apple hit a 52-week low on Thursday but were up 1.7% at 92.07 in pre-market trading.

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