Header Ads

Oil recovery provides platform for Asia energy firms’ rally

The rebound in oil prices from 10-month lows has fuelled a rally in energy firms across the world, providing support to equity markets.
Asian markets mostly rose on Tuesday with energy firms rallying with their US counterparts after the recovery in oil prices extended in New York, where the Dow chalked up another record high ahead of Independence Day.
Crude lost around a fifth of its value between mid-May and mid-June, hitting 10-month lows, as traders fretted that a pick-up in US output was offsetting cuts by key producers in OPEC and Russia.
But the commodity has recovered around half of those losses in recent weeks as US firms have cut the number of rigs pumping, easing supply glut worries.
While both main contracts dipped slightly on Tuesday, regional energy firms tracked the previous day's gains of around two percent on the oil market.
PetroChina surged more than four percent and CNOOC piled on almost three percent in Hong Kong, while Tokyo-listed Inpex added 1.6 percent and JXTG also added nearly three percent.
However, refiner Idemitsu Kosan plunged more than 12 percent after saying it plans to raise up to $1.2 billion in a share sale despite opposition from its founding family to a merger with rival Showa Shell Sekiyu K.K.
Showa Shell soared more than six percent.
In Sydney Woodside Petroleum rallied 1.4 percent and Ro Tinto added 1.5 percent.
‘Aggressive pullback’ 
The gains supported most regional stock markets. Tokyo ended the morning 0.4 percent higher, while Hong Kong gained 0.1 percent and Sydney jumped 1.7 percent. Singapore added 0.1 percent and Wellington was 0.3 percent higher.
But Shanghai slipped 0.4 percent as authorities tightened borrowing rules for home-buyers and Seoul was dragged 0.1 percent down.
In foreign exchanges the dollar held up after bouncing Monday from last week’s sharp losses thanks to upbeat factory figures. Analysts also suggested central banks were stepping back from last week's hawkish comments indicating a tightening of monetary policy.
The pound was weighed by below-forecast manufacturing data while European Central Bank officials looked to temper boss Mario Draghi’s suggestion of higher interest rates.
“We’ve seen an aggressive pullback from last week’s speculative bets fuelled by the hawkish chorus of central bankers,” said Stephen Innes, senior trader at OANDA.
“The dollar recovered in part due to the (US) manufacturing report, which surprised with the highest print since August 2014. But concerns that central banks may temper the hawkish lean for fear of creating unwanted volatility remain in the back of traders minds.”
However, the greenback eased slightly against the Japanese yen following another missile test by North Korea.
Investors are awaiting the release Wednesday of minutes from the Federal Reserve’s June policy meeting at which it raised interest rates, while key US jobs data is due on Friday.

No comments