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Hong Kong - Asian markets rose Thursday with energy firms providing strong support after a surge in oil prices, while the dollar held gains against the yen as a top Federal Reserve official reinforced expectations for further interest rate hikes.
Both main crude contracts soared almost three% Wednesday after data showed a drop in US inventories almost three times more than forecast, fanning hopes of a jump in demand as the American holiday driving season kicks off.
Traders have also been buoyed by hopes that OPEC and Russia's much-vaunted output cuts that started in January appear to be gaining traction, with the key producers also likely to extend the agreement past its end-June deadline.
All of which is welcome news for oil traders after last week's plunge in prices that came on the back of worries about rising US, Nigeria and Libya output, and a slowdown in key market China.
"We saw the biggest draw in inventories for the year last week with stockpiles down more than five million barrels," said Greg McKenna, chief market strategist at AxiTrader. "And it looks like OPEC's production cut is finally biting," he added.
Among Asian energy firms Hong Kong-listed CNOOC jumped 1.3% and PetroChina climbed 0.8%, while Woodside Petroleum added one% in Sydney as Santos gained 1.5%. Inpex added 1.4% in Tokyo.
Oil prices edged up modestly on Thursday.
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Three more hikes?
Jeffrey Halley, senior market analyst at OANDA, added: "With the OPEC production cuts almost certain to be extended, oil may well have dodged the worst for now."
However, he warned "it would be premature to call a bottom in prices as US production continues to ramp up along with that of ... OPEC members Libya and Nigeria (who are exempted from the output cuts)".
On equities markets Tokyo ended the morning 0.2% higher and Hong Kong jumped 0.5%, putting it on course for a fourth-straight gain and near two-year highs.
Sydney added 0.6%, Seoul gained 0.8% and Singapore was 0.6% higher while Taipei and Manila also put on strong shows.
Wellington surged one% after the New Zealand central bank held interest rates and said it would keep them unchanged for some time as inflation was likely to ease -- but this sent the country's dollar diving 1.5%.
Shanghai bucked the trend, losing 0.5% on worries about a government crackdown on leveraged investment as it looks to instill some stability in the volatile market.
In foreign exchanges the dollar held its gains above 114 yen, which it broke Wednesday for the first time since March, after the head of the Boston Fed called for three more rate hikes this year and a further tightening of liquidity.
Eric Rosengren's comments warning the US economy could overheat compare with most forecasts for just two more rate increases this year.
