Energy stocks sink in Asia as oil plummets, dollar weak
AFP
AFP, HONG KONG: Energy firms sank in Asian trade yesterday as oil prices extended the previous days sharp losses due to profit-taking after a recent rally and fresh worries about a global oversupply.
Even a fall in the dollar, which usually makes crude cheaper, could not stop the slide in the commodity after Iraq flagged a pick-up in output and rebels in key producer Nigeria announced a ceasefire.
Investors were also treading water as they await a key speech from Federal Reserve boss Janet Yellen, hoping for some insight into the state of the US economy and the banks plans for its next interest rate rise.
After a seven-day rally that put oil into a bull marketa 20 per cent jump from recent lowsthe commodity has taken a hiding since the start of this week.
In afternoon trade on Tuesday West Texas Intermediate fell one per cent to $46.96 and Brent lost 0.7 per cent to $48.84.
On Monday WTI shed 2.9 per cent and Brent 3.4 per cent after Iraq signalled a likely increase in output from Kirkuks oil fields under a deal between the region and the countrys new oil minister.
At the weekend the Niger Delta Avengers announced a conditional ceasefire and agreed to hold talks with the government following months of attacks on oil and gas facilities.
The two developments follow a surge that helped Brent last week break above $50 for the first time since early July. Analysts warned of further drops.Yellen in focus
Were seeing a bit of profit-taking, Ric Spooner, chief analyst at CMC Markets in Sydney, told Bloomberg News.
Its about how far the price had climbed in relation to the current underlying fundamental situation. There is still plenty of supply around. It wouldnt be surprising to see this downtrend continue and its possible we could see some sort of basing around $44-$45.
Among energy firms, Japans Inpex and JX Holdings each fell more than two per cent , while in Hong Kong CNOOC shedmore than one per cent and PetroChina 0.6 per cent. Sydney-listed Woodside Petroleum eased 0.4 per cent.
On regional stock markets, Tokyos Nikkei finished 0.6 per cent lower, while Hong Kong was flat.
Shanghai added 0.2 per cent and Sydney closed 0.7 per cent higher while Seoul tacked on0.4 per cent.
In early European trade London and Paris each rose 0.4 per cent and Frankfurt added 0.5 per cent .
The dollar fell below 100 yen again despite weekend comments from Fed vice chairman Stanley Fischer, which fanned speculation of an interest rate rise before the end of the year.
They were followed by similarly hawkish noises from two regional bank presidents.
The greenback fell to 99.94 yen at one point in Tokyo. It later edged back to 100.07 yen from 100.32 yen in New York, while it was also down against most high-yielding currencies including the Australian dollar and South Korean won.
Observers expect markets to remain cautious leading up to Yellens speech at the annualglobal central bankers symposium at Jackson Hole in WyomingFriday.
The speech remains the headline event this week and I think we could continue to see an element of caution in the markets in the lead-up to this, Craig Erlam, senior market analyst at OANDA, said in a note.
Investors are still not buying a 2016 rate hike, even following Stanley Fischers comments over the weekend. The only question is whether (Yellen will) strongly hint at a hike this year or indicate that holding off to early next year may be warranted.
