Energy firms once again sank in Asian trade on Thursday after another plunge in oil prices as glut fears return, though most regional markets enjoyed a recovery from the previous day’s sell-off.
Crude traders are firmly in retreat as production cuts led by OPEC and Russia fail to calm fears about increasing output in the US and other nations including Nigeria, reports BSS.
Both main contracts dived more than two percent on Wednesday despite a bigger- than-forecast drop in US inventories, with analysts suggesting OPEC and Russia should announce further output cuts.
“The fact that oil is now falling on a bullish inventory number must be a red light for producers and traders alike,” said Jeffrey Halley, senior market analyst at OANDA.
“OPEC/non-OPEC must now confront the oil elephant in the room, increasing the overall production cut from its present levels. The other choice will be to let the market set the price, which may mean oil drops to a level that even the newly slimline US shale industry struggles to break even at.”
However, the crisis comes at a time of heightened tensions between OPEC kingpin Saudi Arabia and fellow members Iran and Qatar, leaving little chance of co-operation.
While crude edged up slightly in Asia, it is down around 25 percent from its January highs and sitting at levels not seen since August.
That has dug into energy firms for another day and in Hong Kong, Sinopec was one percent off while PetroChina slipped 0.6 percent. Sydney-listed Woodside Petroleum dropped 0.2 percent and Inpex tumbled more than two percent in Tokyo.
On broader markets, Shanghai was up 0.3 percent, building on Wednesday’s rally that came after MSCI finally approved Chinese mainland-listed or A-shares for inclusion in its emerging markets index. Sydney added 0.5 percent and Singapore was 0.3 percent higher, while Seoul added 0.2 percent. Hong Kong was flat.
Tokyo finished the morning session 0.1 percent lower, with Takata the standout loser. The airbag maker crashed more than 50 percent Thursday on fears it is headed for bankruptcy and plans to sell its assets to a US company.
The Tokyo-based company at the center of the global auto industry’s biggest- ever safety recall has tumbled for four straight days and its stock is now worth less than a quarter of its value just a week ago.
In currency trade, the dollar was unable to break out against the pound and yen, despite Federal Reserve indications it will hike interest rates again this year.