Thursday, March 28, 2024 | Ramadan 17, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Asia markets down as energy firms hit by oil rout

949707
949707
minus
plus

Hong Kong: Energy firms led a broad sell-off in Asian markets on Thursday following a five per cent plunge in oil prices, but the dollar held on to gains after a surprisingly strong US jobs report.


Wall Street suffered another loss after a closely watched report showed a shock surge in US oil inventories that rekindled worries about a global supply glut that has hammered the crude market since mid-2014.


The Energy Department revealed a whopping eight million barrel increase in supplies over the past week — four times more than expected — owing to higher domestic production and increased stockpiling.


The news battered the oil market, with both main contracts slumping more than five per cent to lows not seen since the end of last year.


Jeffrey Halley, senior market analyst at OANDA, said the report was the “straw that broke the camel’s back”, with concerns already abound that Russia was not pulling its weight on much-vaunted production cuts agreed between OPEC and non-OPEC countries in November.


And Greg McKenna, chief market strategist at AxiTrader, said there is growing unease that too much of the burden on reducing output is being shouldered by OPEC nations, particularly kingpin Saudi Arabia.


While oil edged back up Thursday, Asian energy firms took the heat. Japan’s Inpex shed 1.2 per cent, Hong Kong-listed PetroChina dived 2.2 per cent and CNOOC lost 1.8 per cent, while Woodside Petroleum fell 1.1 per cent in Sydney.


That in turn hit wider markets, with Hong Kong down 1.2 per cent and Shanghai 0.7 per cent off at the close. Traders brushed off another jump in China’s factory gate prices — the highest in eight years — that indicate a return to inflation in the country, with consumer inflation continuing struggle.


Sydney fell 0.3 per cent and Seoul was 0.2 per cent off and Singapore slipped 0.9 per cent. Taipei dived one per cent.


“The data catalysed a new wave of glut concerns as the higher oil price might spur North American’s production, especially of shale oil, which may ultimately counterbalance OPEC’s effort to support oil prices,” said CMC Markets analyst Margaret Yang.


The oil figures overshadowed a surprise jump in private jobs creation in the US, which beefed up expectations for Friday’s key government jobs report and reinforced expectations the Federal Reserve will hike interest rates next week.


That in turn fired a rally in the dollar, which peaked close to 115 yen Wednesday before paring the gains, with traders still uncertain as President Donald Trump has provided little detail on his plans to ramp up infrastructure spending and cut taxes.


The dollar advance on the yen provided the region with one of its only advances as Tokyo added 0.3 per cent to end a four-day losing streak.


Also acting as a weight on further dollar gains are concerns about upcoming elections in France and the Netherlands as well as geopolitical crises including North Korea’s recent missile test.


The euro dipped ahead of a closely watched policy meeting by the European Central Bank later in the day.


In early European trade London fell 0.5 per cent while Frankfurt and Paris each lost 0.3 per cent. — AFP


SHARE ARTICLE
arrow up
home icon