HONG KONG, Nov 23 — Oil extended losses today after Opec announced the shock delay of a key policy meeting, suggesting fresh upheaval in the bloc, while equities were mixed after two US reports dented recent euphoria over the future of interest rates.
Both main crude contracts slipped on news that the much-anticipated gathering of the major producers — combining Opec and 10 allies — would be put back by four days to November 30.
Prices had dived almost five per cent at one point yesterday, before paring the losses.
Reports said the decision was made after Angola and Nigeria pushed back against lower targets that were urged by others, with Saudi Arabia said to have been preparing to extend a one-million-barrel-a-day output cut into the new year.
Riyadh and Russia unveiled massive cuts earlier this year in a bid to boost prices, which have come under pressure owing to stuttering economies in the United States, Europe and particularly China.
Pierre Andurand, of Andurand Capital Management, said global supplies were healthier than expected, meaning the Opec+ cartel would need to reduce output.
“The Saudis will probably want the other countries to cut as well,” he told Bloomberg TV. “It’s going to be a negotiation.”
Equity markets in Asia fluctuated, even after a fresh pre-Thanksgiving bounce on Wall Street.
Hong Kong bounced back from morning losses to edge higher in the afternoon, with developers in ascendance as it emerged China is preparing to offer the property sector more support, calling for banks to do more for the industry.
That came after Bloomberg News reported on Wednesday that authorities had drawn up a draft list of 50 firms that would be eligible for more monetary support.
Among the winners, struggling Country Garden soared more than 23 per cent after it was reported the company was on the list. Another troubled developer, Evergrande, was up more than three per cent.
Elsewhere, Shanghai, Seoul, Wellington, Mumbai and Jakarta also rose but Sydney, Singapore, Taipei, Manila and Bangkok were in retreat.
London, Frankfurt and Paris all rose at the open.
The tepid performance came after data showed a pick-up in inflation expectations among US consumers, who now see it at 4.5 per cent over the next year, against 4.4 per cent previously expected, according to the University of Michigan.
Separately, US jobless claims came in far lower than forecast, showing that the labour market continues to hold up.
The Fed has repeatedly said it would make its rate decisions based on data, particularly inflation and jobs.
The readings gave a little jolt to the good mood on trading floors that has been swirling since below-par consumer price figures last week reinforced optimism the rate-hike cycle had ended and cuts could be on the way next year.
“Markets can be capricious sometimes, and at the present junction, investors are looking for clues confirming the Fed is done with its current tightening cycle, thus evidence to the contrary can be unsettling,” said National Australia Bank’s Rodrigo Catril.
The latest US data “triggered a (disproportionate) market reaction, US jobless claims and inflation expectations data did not support the story US inflation is easing against a weakening US labour market”, he said.
Still, observers said the outlook was bright for equities.
“We do expect the stock market rally to continue,” said Audrey Goh of Standard Chartered Bank.
“If you look at inflation, that clearly has moderated, so that will allow the Fed to stand pat. Our expectation is that policy rates have peaked.” — AFP
