Asian energy firms hit by tumble in oil prices | Fin24
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Asian energy firms hit by tumble in oil prices

Jan 11 2017 07:26

Hong Kong - Asian energy firms retreated on Tuesday after a plunge in oil prices, while the pound's troubles mounted on worries about Britain's plans to leave the European Union.

Both main crude contracts sank almost four percent on Monday as traders fret over Iraq's commitment to stick to output cuts agreed amid much fanfare by Opec and other key producers in November.

The deal sent the cost of a barrel surging last month towards $60 on hopes the cuts could reduce a global glut that had sent prices to near 13-year lows last February.

However, Iraq's oil minister said exports from its southern ports reached a record high in December, leading to suspicion it will not stick to the cuts, which came into effect on January 1.

"The Iraqi headlines have raised concerns about compliance," John Kilduff, a partner at New York-based hedge fund Again Capital, told Bloomberg News.

"We need to see compliance outside of Saudi Arabia, Kuwait and the other Gulf states."

While both contracts edged up on Tuesday, regional energy firms fell although they pared early losses. Sydney-listed Woodside Petroleum lost 0.1% and BHP Billiton was down 0.4%.

Inpex lost 1.5% in Tokyo and CNOOC was down 1.3% in Hong Kong. PetroChina was flat.

Brexit apprehension

Among regional markets Tokyo and Sydney each ended down 0.8 percent and Seoul shed 0.2%. There were also losses in Mumbai and Kuala Lumpur.

Shanghai closed down 0.3% but Hong Kong added 0.8%, with investors welcoming data showing China's factory-gate prices rose last month at their fastest pace in more than five years.

In early European trade London added 0.3%, having closed Monday at a record high, Frankfurt gained 0.2% and Paris put on 0.1%.

On currency markets the pound struggled at three-month lows against the dollar after British Prime Minister Theresa May said at the weekend the country would have control over its borders after Brexit - suggesting she would be prepared to quit Europe's single market to achieve it.

"The Brexit narrative has also contributed to market apprehension and added to souring global risk sentiment," said Stephen Innes, senior trader at OANDA.

That unease has filtered through to other parts of the currency market, with the yen extending gains against the dollar. Analysts say there are fears the greenback's rally since Donald Trump's election may have been overdone.

Investors "were keen to take shelter under the yen's umbrella while Brexit cloud storms build", Innes added.

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