Wednesday, September 28, 2022

Oil languishes after OPEC fails to deepen supply cuts, Asia stocks retreat

Oil languishes after OPEC fails to deepen supply cuts, Asia stocks retreat

SINGAPORE - Crude prices remained subdued early on Friday after an agreement by OPEC to extend existing supply curbs disappointed many who had hoped for larger cuts.

Asian stocks dropped, turning away from Wall Street's strong performance overnight.

The Organization of Petroleum Exporting Countries and some non-OPEC producers agreed at a meeting in Vienna on Thursday to extend supply cuts of 1.8 million barrels per day until the end of the first quarter of 2018.

While OPEC's move had been expected, some oil market investors had hoped producers would agree to longer or deeper cuts to drain a global glut of oil. Talk around extending the cuts had driven crude futures higher in recent days, with the confirmation prompting profit-taking.

"This seems like a clear case of buy the rumour, sell the fact, which was touted to be the reaction," James Woods, global investment analyst at Rivkin Securities in Sydney, wrote in a note.

US crude prices were flat at $48.88 early on Friday, after losing 4.8 percent overnight, set to end the week 2.8 percent lower. MSCI's broadest index of Asia-Pacific shares outside Japan, which closed at a two-year high on Thursday, fell 0.2 percent, shrinking its weekly gain to 1.5 percent.

Japan's Nikkei also slipped 0.2 percent, on track for a 1 percent increase for the week. Overnight on Wall Street, the S&P 500 and the Nasdaq closed at record highs after strong earnings reports from retailers. The strong performance helped lift MSCI's global stocks index to a record close overnight.

Sterling fell 0.3 percent on Friday to $1.2906, after a YouGov poll showed Britain's opposition Labour Party had cut the lead of Prime Minister Theresa May's Conservatives to five points less than a fortnight before national elections also weighed on sterling.

Sterling declined 0.3 percent on Thursday after data showed Britain's economy slowed more than previously thought in the first quarter of this year. "The UK is now beginning to look like the sick man of Europe," said Kathleen Brooks, research director with City Index in London.

The dollar pulled back 0.1 percent to 111.68 yen on Friday, and was set to end the week up 0.2 percent. The dollar index, which tracks the greenback against a basket of six major peers, was steady and poised for a 0.1 percent gain in the week.

US unemployment data that showed a tightening labour market was offset by a widening goods trade deficit in April and news of declining inventories, prompting analysts to pare their second-quarter economic growth estimates. The euro was flat at $1.121. Gold was steady at $1,254 an ounce, poised for a 0.1 percent loss for the week. -Reuters