HONG KONG - A modest recovery in oil prices provided some respite for Asian energy firms on Wednesday but STOCK MARKETS extended losses as China’s ongoing economic woes cast a pall over the region’s trading floors.
The cost of the black gold has plunged by almost a tenth since Friday’s refusal by the Organization of the Petroleum Exporting Countries (OPEC) oil exporters’ group to agree a ceiling on output despite oversupply and anemic demand across the globe.
The impact of the weak COMMODITY PRICE environment was also made stark on Tuesday when US mining giant Anglo American said it would scythe almost two-thirds of its workforce and reduce investment by about $1 billion.
On Wednesday US benchmark West Texas Intermediate was up 1.7 percent in the morning while Brent added 1.2 percent.
Among regional energy firms BHP Billiton added almost one percent in Sydney, INPEX gained 1.3 percent in Tokyo and Hong Kong-listed CNOOC put on 1.7 percent. However, the oil contracts are still struggling around seven-year lows and analysts said the gloom was likely to last for some time.
“We remain of the view that oil will stay below $50 a barrel into the foreseeable future,” Evan Lucas, a markets strategist in Melbourne at IG Limited, told clients according to Bloomberg News.
“The industrial metals and iron-ore metals are basically facing the same factors that are influencing oil, he said.
A global supply glut, weak demand and the growth slowdown in China have combined with soaring production to send crude slumping more than 60 percent over the past 18 months. Most Asian markets extended their losses of this week, tracking a downturn on Wall Street where all three main indexes ended in the red.