HONG KONG: Energy firms sank in Asian trade on Tuesday as oil prices extended the previous day s sharp losses on profit-taking and fresh worries about a global oversupply.
Even a fall in the dollar, which usually makes crude cheaper, was unable to stop the slide in the commodity after Iraq flagged a pick-up in output and rebels in key producer Nigeria announced a ceasefire.
Investors were also treading water as they awaited a key speech from Federal Reserve boss Janet Yellen hoping for some insight into the state of the US economy and the bank s plans for its next interest rate hike.
After a seven-day rally that put oil into a bull market — a 20 percent jump from recent lows — the commodity has taken a hiding since the start of this week.
In morning trade on Tuesday, West Texas Intermediate fell 1.5 percent to $46.70 and Brent lost 1.3 percent to $48.54.
On Monday, WTI shed 2.9 percent and Brent 3.4 percent after Iraq signalled a likely increase in output from Kirkuk s oil fields under a deal between the region and the country s new oil minister.
And on Saturday the Niger Delta Avengers announced a conditional ceasefire and agreed to hold talks with the government following months of attacks on key oil and gas facilities.
The two developments follow a surge that helped Brent last week break above $50 for the first time since early July and analysts warned of further drops.
Yellen in focus
“We re seeing a bit of profit-taking,” Ric Spooner, chief analyst at CMC Markets in Sydney, told Bloomberg News.
“It s about how far the price had climbed in relation to the current underlying fundamental situation. There is still plenty of supply around. It wouldn t be surprising to see this downtrend continue and it s possible we could see some sort of basing around $44-$45.”
Among energy firms, Japan s Inpex and JX Holdings each fell about two percent in the morning, while in Hong Kong, CNOOC shed more than two percent and PetroChina 1.5 percent. Sydney-listed Woodside Petroleum sank 0.8 percent.
On regional stock markets, Tokyo s Nikkei fell 0.2 percent by the break, while Hong Kong was off 0.3 percent and Singapore eased 0.1 percent. But Shanghai added 0.4 percent and Sydney 0.9 percent while Seoul tacked on 0.2 percent.
The dollar struggled to maintain Monday s rally despite weekend comments from Fed vice chairman Stanley Fischer that fanned speculation a rise could come before the end of the year. They were followed by similarly hawkish noises from two regional bank presidents.
However, the greenback dipped to 100.16 yen from 100.32 yen, while it was also down against most high-yielding currencies including the Australian dollar and South Korean won.
Market-watchers expect markets to remain cautious leading up to Yellen s speech at the annual global central bankers symposium at Jackson Hole, Wyoming, Friday.