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Energy firms track plunge in oil as Asian markets retreat

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AFP Hong Kong
Last Updated : Nov 21 2018 | 9:30 AM IST

Asian markets sank again Wednesday, tracking a Wall Street rout, with energy companies suffering further losses following a collapse in oil prices.

However, Nissan and Mitsubishi recovered slightly after France and Japan sought to reassure on the future of their tie-up with Renault following the arrest of head Carlos Ghosn on Monday.

While investors in all sectors are essentially in selling mode, firms linked to the oil industry are among the worst hit as the price of crude continues to plunge on concerns about demand and high production.

The commodity took another battering on Tuesday, with both main contracts down more than six per cent following another Wall Street sell-off and as traders fret that Saudi Arabia might not deliver on planned production cuts.

Donald Trump's support for Riyadh in the case of murdered journalist Jamal Khashoggi has been taken by some observers as a move to prevent them from lowering output at the December meeting of OPEC and non-OPEC members.

"At the heart of the matter is the lack of market respect for OPEC rhetoric regarding deep production cuts, (which) have been ignored as the market now questions if the projected reduction would be entirely sufficient to rebalance markets given the expected glut in the first quarter," said Stephen Innes, head of Asia-Pacific trade at OANDA.

Adding to the dour mood is the China-US trade war -- which shows no signs of easing just a week before Trump and China's Xi Jinping are due to meet -- US waivers on buying Iranian oil and a slowing global economy.

And Cailin Birch, a global economist at The Economist Intelligence Unit, told Bloomberg News: "We expect the pace of growth in both the US and China to slow heading into 2019, which will maintain downward pressure."

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First Published: Nov 21 2018 | 9:30 AM IST

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