Oil plummets taking Asia risk in tow

Energy shares led declines on Asian stock markets Friday after oil prices fell to their lowest levels in nearly six months on oversupply concerns.

KEEPING SCORE: Hong Kong’s benchmark Hang Seng index lost 1.2 percent to 24,396.85 while the Shanghai Composite index in mainland China shed 0.7 percent to 3,104.02. Australia’s S&P/ASX 200 fell 0.7 percent to 5,835.20. Taiwan’s benchmark fell and Southeast Asian indexes were mixed. Markets in Japan and South Korea were closed for holidays.

CRUDE CONCERNS: U.S. benchmark crude futures fell under the key $45 level after tumbling nearly 5 percent during U.S. trading. Oil is being hammered by uncertainty over whether OPEC will extend an agreement to cut production and worries that renewing the deal wouldn’t be enough to counter a growing glut. Member nations of the Organization of the Petroleum Exporting Countries are due to discuss the deal later this month. Crude fell $1.36, or 3 percent, to $44.16 a barrel after falling as low as $43.76 in Asian trading, wiping out all gains since the production cut agreement in November. The contract lost $2.30, or 4.8 percent, to settle at $45.52 a barrel on Thursday. Brent crude, the standard for international oils, fell $2.75 to $47.05 a barrel in London.

QUOTEWORTHY: “The collapse in oil prices saw (benchmark West Texas Intermediate) plunge as the market continues to probe for a bottom amid oversupply concerns,” said Stephen Innes, senior trader at OANDA. He said traders saw $45 as an important level because the Saudi oil minister said earlier this week that prices would be kept in the $45-55 range. “If $45 was OPEC line in the sand, well it’s been breached so let us see how strong OPEC resolve is,” he said.

ENERGY SHARES: Oil company stocks led declines. PetroChina, China’s biggest oil producer, lost 3.2 percent and Sinopec, the country’s largest refiner, fell 2.8 percent. Australia’s Woodside Petroleum slid 3 percent.

ABC News

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes