Tumbling oil prices send $27b down market gurgler

PLUNGING oil prices have fuelled a fresh wave of negativity in share markets, with mounting fears that concerted efforts to limit supplies are doing little to halt a crude glut.

Australia’s benchmark ASX 200 index suffered its worst session for the year, tumbling 1.6 per cent to 5665.7 points – a four-month low – as energy and mining stocks copped a belting. When the dust settled, about $27 billion had been wiped from the values of the nation’s biggest listed companies.

Local investors took their cues from a jittery Wall Street session overnight on Tuesday, in which the Dow Jones Industrial Average dipped 0.3 per cent. While this was a minor setback, it was nonetheless its biggest fall for a month amid an otherwise glittering run for US bulls.

Earlier, Brent crude – the global benchmark – slid 2 per cent to $US46.02 a barrel, its lowest price since November 15, while West Texas Intermediate hit a nine-month low of $US43.23.

Exposed sectors responded in kind: energy stocks slumped 2.6 per cent while the materials sector, which includes heavyweight miners BHP and Rio Tinto, was off 2.5 per cent.

Electricity and gas retailer Origin Energy shed 3.1 per cent to $6.77, oil and gas producer Woodside Petroleum gave up 2.1 per cent to $29.29.

Only the defensive healthcare sector avoided the carnage, closing marginally higher. The slump comes as the 14-member Organisation of the Petroleum Exporting Countries and a collective of major non-OPEC producers, including Russia, face fresh hurdles to their campaign to shore up crude prices.

Libya and Nigeria, both of which are exempt from the cartel’s output restrictions have ramped up oil production as they bounce back from supply disruptions sparked by militants and protesters, filling the gap created by OPEC’s May accord much more quickly than analysts had expected.

All the while, US drillers continue to power ahead, with the number of operational oil rigs across North America now rising for a 22nd straight week.

The big four banks all retreated between 1.8 per cent and 2.9 per cent yesterday, with National Australia Bank the worst performer.