Asian en­ergy firms hit by tum­ble in oil prices

Enterprise - - International news -

Asian en­ergy firms were the big losers af­ter a plunge in oil prices, while the pound ´s trou­bles mounted on wor­ries about Bri­tain ´s plans to leave the Euro­pean Union.

Both main crude con­tracts sank al­most four per­cent as traders fret over Iraq ´s com­mit­ment to stick to out­put cuts agreed to much fan­fare by OPEC and other key pro­duc­ers in Novem­ber last year.

The deal sent the cost of a bar­rel surg­ing last month to­wards $60 on hopes the cuts could put a dent into a global glut that had sent prices to near 13-year lows in Fe­bru­ary 2016.

How­ever, Iraq ´s oil min­is­ter said ex­ports from its southern ports in the Gulf reached a record high in De­cem­ber 2016, lead­ing to sus­pi­cion it will not stick to the cuts, which came into ef­fect on Jan­uary 1 this year.

“The Iraqi head­lines have raised con­cerns about com­pli­ance,” ac­cord­ing to John Kil­duff, a part­ner at New York-based hedge fund Again Cap­i­tal LLC.

“We need to see com­pli­ance out­side of Saudi Ara­bia, Kuwait and the other Gulf states.” While both con­tracts edged up slightly, re­gional en­ergy firms tracked sharp losses in their US coun­ter­parts, with Syd­ney-listed Wood­side Pe­tro­leum and BHP Bil­li­ton each down one per­cent In­pex lost 0.4 per­cent in Tokyo and Petro-China dived two per­cent in Hong Kong, where CNOOC was also down 1.R per­cent.

The losses also weighed on some re­gional stock mar­kets. Syd­ney shed 0.9 per­cent and Shang­hai lost 0.3 per­cent while Seoul eased 0.2 per­cent.

How­ever, Hong Kong added 0.3 per­cent, with in­vestors wel­com­ing data show­ing prices at China ´s fac­tory gates had risen in De­cem­ber 2016 at their fastest pace in more than five years.

Tokyo ended the morn­ing flat, hav­ing swung in and out of pos­i­tive ter­ri­tory.

On cur­rency mar­kets the pound strug­gled at three-month lows against the dol­lar af­ter Bri­tish Prime Min­is­ter Theresa May said the coun­try would have control over its bor­ders af­ter Brexit, sug­gest­ing she would be pre­pared to quit Europe´s sin­gle mar­ket to achieve it.

“The Brexit nar­ra­tive has also con­trib­uted to mar­ket ap­pre­hen­sion and added to sour­ing global risk sen­ti­ment,” said Stephen Innes, se­nior trader at OANDA.

That un­ease has fil­tered through to other parts of the cur­rency mar­ket, with the yen ex­tend­ing gains against the dol­lar as an­a­lysts say there is a fear the green­back ´s rally since Don­ald Trump ´s elec­tion may have been over­done.

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