Asia energy firms rally with oil after output cut deal

13-Dec-2016 Intellasia | AFP | 6:00 AM Print This Post

Energy firms in Asia surged with rocketing oil prices on Monday after 11 non-OPEC countries agreed to huge cuts in crude production, while Saudi Arabia also signalled a bigger reduction in output than previously agreed.

The 11 nations, led by Russia, said they would pump more than half a million fewer barrels a day from next month in an effort to address a global supply glut that has scythed prices over the past two years.

The cut will contribute to the Organisation of the Petroleum Exporting Countries’ own initiative unveiled with Russia on November 30.

Also at the weekend OPEC kingpin Saudi Arabia said it will slash production beyond what was previously agreed by OPEC last month, providing an additional boost for prices.

“This is a very powerful message that producers want to balance the market higher,” said Chris Weston, chief market strategist in Melbourne at IG, told Bloomberg News. “As a statement of intent, this is about as bullish as it gets.”

Both main contracts surged almost five percent in early Asian trade Monday, setting a fire under energy firms in the region.

Hong Kong-listed CNOOC added 1.5 percent and PetroChina gained 1.7 percent while in Sydney Woodside Petroleum was up 2.7 percent and Japan Petroleum jumped 6.8 percent in Tokyo.

However, the gains were unable to spark a broad rally across regional markets.

Tokyo was up 0.7 percent by the break but Hong Kong lost 0.3 percent and Shanghai shed 0.7 percent. Sydney, Seoul and Singapore were flat.

On currency exchanges the dollar rallied ahead of an expected US interest rate hike this week by the Federal Reserve.

In early trade the dollar bought 115.40 yen compared with 115.29 yen in New York and well up from the 114.40 yen earlier Friday in Asia.

The greenback has surged in the past month on expectations of higher borrowing costs, with President-elect Donald Trump’s promises of big spending and tax cuts fanning talk of a surge in inflation.

– Key figures around 0230 GMT -

Tokyo – Nikkei 225: UP 0.7 percent at 19,142.82 (break)

Hong Kong – Hang Seng: DOWN 0.3 percent at 22,700.31

Shanghai – Composite: DOWN 0.7 percent at 3,211.12

euro/dollar: DOWN at $1.0552 from $1.0558 Friday

Dollar/yen: UP at 115.40 yen from 115.29 yen

Pound/dollar: UP at $1.2588 from $1.2576

Oil – West Texas Intermediate: UP $2.37 at $53.87 per barrel

Oil – Brent North Sea: UP $2.35 at $56.68

New York – Dow: UP 0.7 percent at 19,756.85 (close)

London – FTSE 100: UP 0.3 percent at 6,954.21 (close)4


Category: FinanceAsia

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