HONG KONG, China (AFP) — Oil prices pressed on with fresh gains in Asian trade Tuesday, boosting energy firms, after Russia and Saudi Arabia indicated they could extend an output cut into next year.
The world’s top two crude-producing nations raised the idea at the weekend, with a deal agreed between the Organization of the Petroleum Exporting Countries — of which Saudi Arabia is the key player — and Russia coming to an end in six weeks.
The news sent oil prices soaring about two percent on Monday, in turn dragging global energy firms with them.
Monday’s gains come after the commodity was battered earlier this month on worries that the production cut was not enough to make a dent in a worldwide supply glut and increasing output from the United States and other nations.
“The comments from Saudi Arabia and Russia are driving prices up but I’m skeptical that crude will see a new level,” Hong Sung Ki, a commodities analyst at Samsung Futures, told Bloomberg News.
“As producers in the US are expected to increase output, prices will continue to be restricted from rising.”
But Greg McKenna, chief market strategist at AxiTrader, pointed out the fact that traders were overlooking the need for a further cut in oil output suggested problems persisted.
“That such a large output cut extension is a tacit admission of failure is for another day and discussion,” he said in a note.
On Tuesday the International Energy Agency said supply and demand in the oil market are close to matching up but warned rising US supply could mitigate the OPEC-led production cuts.
Hong Kong-listed PetroChina gained 0.4 percent and CNOOC put on 0.3 percent, while Woodside Petroleum in Sydney was up 0.2 percent and Rio Tinto jumped 1.4 percent.
Euro extends gains
On equity markets Tokyo edged up 0.3 percent by the close, Hong Kong slipped 0.1 percent on profit-taking following a six-day rally, while Shanghai finished up 0.7 percent, marking a fourth straight day of gains.
Seoul and Sydney each added 0.2 percent.
But Singapore, Taipei and Wellington were all lower.
In New York the S&P 500 and Nasdaq each ended at record highs, as did London and Frankfurt, with German traders cheering a strong win for Chancellor Angela Merkel’s party in a regional vote.
In early European trade Tuesday London opened slightly higher but Frankfurt lost 0.2 percent while Paris was 0.5 percent lower.
On currency markets the euro extended gains to break above $1.10 after the German election result while the dollar’s weakness has also been caused by a series of below-par results out of the US, including on inflation.
“The euro is strengthening as political concerns in Europe ease while the dollar is being sold” after the weak economic data, Marito Ueda, a senior dealer at FX Prime, told AFP.
The greenback was also down against most other higher-yielding currencies, with the South Korean won 0.7 percent higher, the Thai baht up 0.2 percent and the Malaysian ringgit 0.5 percent stronger.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 19,919.82 (close)
Hong Kong – Hang Seng: DOWN 0.1 percent at 25,335.94 (close)
Shanghai – Composite: UP 0.7 percent at 3,112.96 (close)
London – FTSE 100: FLAT at 7,546.63
Euro/dollar: UP at $1.1010 from $1.0977 at 2100 GMT
Dollar/yen: DOWN at 113.40 yen from 113.75 yen
Pound/dollar: UP at $1.2921 from $1.2897
Oil – West Texas Intermediate: UP 23 cents at $49.08 per barrel
Oil – Brent North Sea: UP 24 cents at $52.06 per barrel
New York – Dow: UP 0.4 percent at 20,981.94 (close)
