Energy hit in Asia as oil sinks, dollar weak

HONG KONG: Energy firms sank in Asian trade yesterday as oil prices extended the previous day’s 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 bank’s plans for its next interest rate rise.

After a seven-day rally that put oil into a bull market -- a 20% jump from recent lows --the commodity has taken a hiding since the start of this week.

In afternoon trade yesterday West Texas Intermediate fell 1% to $46.96 and Brent lost 0.7% to $48.84.

On Monday WTI shed 2.9% and Brent 3.4% after Iraq signalled a likely increase in output from Kirkuk’s oil fields under a deal between the region and the country’s 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.

Among energy firms, Japan’s Inpex and JX Holdings each fell more than 2%, while in Hong Kong CNOOC shed more than 1% and PetroChina 0.6%. Sydney-listed Woodside Petroleum eased 0.4%.

On regional stock markets, Tokyo’s Nikkei finished 0.6% lower, while Hong Kong was flat.

Shanghai added 0.2% and Sydney closed 0.7%higher while Seoul tacked on 0.4%.

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 Yellen’s speech at the annual global central bankers’ symposium at Jackson Hole in Wyoming Friday.