The Business Times

Asia: Stocks mostly lower, oil extends losses after Opec move

Published Fri, Nov 28, 2014 · 02:51 AM

[HONG KONG] Asian markets mostly fell Friday, with energy firms taking a dive as oil sat at four-year lows after the Opec cartel ignored calls to cut production in response to plunging prices and a supply glut.

Sydney's ASX/S&P 200, the home of energy giants such as BHP Billiton, Woodside and Santos, took a huge hit as investors fled to the sidelines, although regional airlines benefited from the prospect of cheap fuel.

The index tumbled 1.34 per cent, Seoul lost 0.16 per cent and Hong Kong shed 0.24 per cent, while Shanghai was flat. However, Tokyo climbed 0.94 per cent thanks to a weakening yen.

US markets were closed for Thanksgiving.

At a closely watched meeting Thursday the Organization of the Petroleum Exporting Countries (Opec) said it would "maintain the production level of 30 million barrels per day", where it has been for the past three years.

The 12-nation cartel, which pumps a third of global oil supplies, made the move despite calls from around the world - including from some of its own members - to cut output as prices had fallen by a third since June.

The news was greeted with a huge sell-off on oil markets, with both main contracts diving around five percent to four-year lows. New York's West Texas Intermediate (WTI) at one point slumped to US$67.75 a barrel and London's Brent North Sea crude touched US$71.25 - both four-year troughs - before slightly recovering.

In early Asian trade WTI was at US$68.76, down 29 cents from its settle price in electronic trading in New York on Thursday. US floor trading was closed due to Thanksgiving. Brent dropped 27 cents to US$72.31.

"It seems there were still plenty of traders holding out hope that the supply of oil from the world's largest group of producers would be cut," Scott Schuberg, chief executive at Rivkin Securities in Sydney, told Dow Jones Newswires.

In Sydney energy firms BHP Billiton lost more than three percent, Woodside shed more than five percent and Santos slumped 10 per cent.

However, Asian airlines - whose main cost is fuel - were higher. In Hong Kong, China East Airlines jumped eight per cent, Tokyo-listed Japan Airlines added four per cent and Qantas gained more than five per cent in Sydney.

On foreign exchange markets the euro edged up after sinking on Thursday in reaction to speculation the European Central Bank could begin buying government bonds as part of a monetary easing drive.

The euro bought US$1.2461 against US$1.2460 and 147.26 yen compared with 146.74 yen.

The yen came under pressure again after data showed inflation slowing in October from the previous month.

The dollar was trading at 118.14 yen, up from 117.74 yen in London.

Gold was at US$1,184.72 an ounce, compared with US$1,196.58 late Wednesday.


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