Oil climbs above US$51 before producer talks as Asian stocks swing

[WELLINGTON] Crude oil rose a second day, breaching US$51 a barrel in New York before a meeting between Opec and other major producers on output cuts. Asian stocks fluctuated at the end of their best week since September, while bonds and the Korean won declined.

US crude advanced to US$51.06 a barrel before talks Saturday in Vienna among the Organization of Petroleum Exporting Countries and 14 other nations. The Asia-Pacific equity benchmark swung as shares in Sydney and Tokyo climbed, while those in South Korea slipped.

Bonds from Australia to Japan fell after the European Central Bank pledged to cut bond buying, while at the same time extending quantitative easing until the end of 2017. The won trimmed its biggest weekly advance in two months as the dollar gained ground.

Opec's shock deal aimed at stabilising oil prices will return to focus this weekend, with the meeting potentially giving investors clues as to whether the agreement will be fulfilled. While the ECB's mixed message initially wrong-footed the market, it was eventually seen as a signal to buy equities with the extension of the current asset purchase program by three months more than economists had expected.

The attention now shifts to the Federal Reserve, with traders all but convinced the US will end the year with an interest-rate hike.

"The immediate focus for the market is the discussions between Opec and non-Opec members this weekend," said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. "The sweet spot for prices is around US$55 a barrel. Anything higher and the market will see more supply."

The Asian data slate is full for Friday, with China to update on consumer and producer prices as well as foreign-direct investment. Thailand updates on foreign reserves and a gauge of Malaysian industrial output is due. The Philippines also reports on trade.

West Texas Intermediate crude futures climbed, extending Thursday's 2.2 per cent bounce and reducing oil's retreat this week to 1.2 per cent.

Russia will fulfill its pledge to cut output by as much as 300,000 barrels a day if Opec follows through on its commitment to curb production, according to a government official familiar with the matter.

Representatives of countries including Mexico and Oman will meet with Opec members in the Austrian capital.

Gold for immediate delivery fell for a second session, declining 0.3 per cent to US$1,167.91 an ounce.

About the same number of stocks rose as fell on the MSCI Asia Pacific Index, which was little changed as of 10am Tokyo time.

Japan's Topix index added 0.2 per cent as Australia's S&P/ASX 200 Index rose by 0.3 per cent, on track for a weekly jump of 2.2 per cent. New Zealand's S&P/NZX 50 Index fell at least 0.2 per cent with the Kospi index in Seoul.

S&P 500 Index futures were little changed at 2,242.25.

The S&P 500 climbed 0.2 per cent to a new peak Thursday, swelling its post-election rally to more than 5 per cent. The Dow Average added 65 points to a record 19,614.81, its seventh gain in eight days.

Currencies The yen, which typically moves at odds with Japanese stocks, fell another 0.2 per cent to 114.31 per US dollar, following a 0.2 per cent pullback last session. It's weakened 0.7 per cent this week, set for its longest run of weekly losses in two years.

The euro was steady at US$1.0616 following a 1.3 per cent slump, which erased an initial surge of as much as 1.1 per cent Thursday following the ECB's statement.

The won lost 0.5 per cent, snapping a three-day rally.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, edged up 0.1 per cent after gaining 0.5 per cent on Thursday.

New Zealand government bonds due in a decade led losses in Asia, with yields rising eight basis points, or 0.08 percentage point, to 3.27 per cent.

Yields on similar maturity notes in Australia and Japan climbed by at least one basis point.

Ten-year Treasury yields advanced by another two basis points to 2.43 per cent, after gaining seven basis points on Thursday following the ECB's move.

BLOOMBERG