Energy firms lead Asia markets down after oil plunge, dollar up

HONG KONG: Energy firms led a broad sell-off in Asian markets yesterday 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.

“If they lose patience, oil – and the bulls – could crack wide open,” he warned.