HONG KONG: Asian energy firms suffered further losses on Thursday as oil extended losses, while currency traders moved cautiously the day before a key speech by Federal Reserve boss Janet Yellen.
World markets have struggled to gain traction this week with few catalysts to spur business ahead of Yellen’s talk at the annual Jackson Hole symposium of global central bankers.
Oil prices sank again on data showing a surprise jump in US stockpiles last week, with West Texas Intermediate shedding 2.8 percent and Brent down 1.8 percent Wednesday. WTI has now lost almost five percent since the end of last week while Brent has slipped 3.6 percent.
The losses come after a seven-day oil rally that saw it enter a bull market—a 20 percent rise from recent lows—on hopes for an output limit deal at a meeting next month between key producers including the OPEC cartel and Russia.
However, key OPEC member Iran told AFP Wednesday it had yet to take any decision on agreeing to a ceiling or even on taking part in the meeting.
On Thursday both oil contracts were down 0.1 percent.
Softening oil prices filtered through to energy firms across the region, with CNOOC and PetroChina in Hong Kong sinking more than one percent, while Japan’s Inpex and JX Holdings were sharply lower, as were Sydney-listed Rio Tinto and BHP Billiton.
On broader equity markets Tokyo ended the morning 0.3 percent lower, while Shanghai was down 0.6 percent and Sydney gave up 0.1 percent.
But Hong Kong added 0.1 percent while Singapore and Seoul were marginally higher.
“Global markets have rallied over the past seven weeks, but those gains have looked increasingly exhausted over the past three,” James Woods, a strategist at Rivkin Securities in Sydney, said.
“We are certainly due for a pullback. That being said, I don’t expect declines to be too large.”
The main focus this week is on what Yellen has to say at Friday’s gathering in Wyoming, with trades hoping for some idea about the Fed’s thinking on monetary policy and its plans for any possible interest rate hike.
As such currency markets are relatively quiet, with the dollar barely moved against its main rivals.
“Everybody is waiting for Yellen, and I’m not sure whether Yellen will provide the impetus all traders are looking for,” Nicholas Teo, a strategist at KGI Fraser Securities in Singapore, told Bloomberg News.
“The Fed rhetoric so far has been balanced although the last two weeks we’ve seen quite hawkish comments.”