HONG KONG (AFP) -Shares in energy firms tumbled Friday after oil prices hit four-year lows in reaction to OPEC’s decision to ignore calls for an output cut, although the prospect of cheaper fuel sent airlines surging.
Sydney’s ASX/S&P 200, the home of commodity giants such as BHP Billiton, Woodside and Santos, was the stand-out loser, although Asian stock markets were mixed as cheaper oil means lower import costs.
At a closely watched meeting Thursday the Organization of the Petroleum Exporting Countries (OPEC) said it would “maintain the production level of 30 million barrels per day”, where it has been for the past three years.
The 12-nation cartel, which pumps a third of global oil supplies, made the move despite calls from around the world – including from some of its own members – to cut output as prices have fallen by a third since June.
The news was greeted with a huge sell-off on oil markets, with both main contracts diving around five per cent to four-year lows. New York’s West Texas Intermediate (WTI) at one point slumped to $67.75 a barrel and London’s Brent North Sea crude touched $71.25 – both four-year troughs – before slightly recovering.
In afternoon Asian trade WTI was at $68.08, down 97 cents from its settle price in electronic trading in New York on Thursday. US floor trading was closed due to Thanksgiving. Brent dropped $1.31 to $71.27.
“It seems there were still plenty of traders holding out hope that the supply of oil from the world’s largest group of producers would be cut,” Scott Schuberg, chief executive at Rivkin Securities in Sydney, told Dow Jones Newswires.
Among regional markets Sydney sank 1.63 per cent, or 87.9 points, to close at 5,313.0 and Seoul was flat, edging down 1.31 points to 1,980.78.
Shanghai rallied 1.99 per cent, or 52.35 points, to 2,682.84 on reports China will soon launch an anticipated deposit insurance system, which would allow more banks to freely compete for depositors. Hong Kong ended flat, dipping 16.83 points, to 23,987.45 .
Tokyo jumped 1.23 per cent, or 211.35 points, to finish at 17,459.85. The Nikkei was helped by a weakening yen and the lower oil prices, which will cut import costs. Japan has ramped up imports of the black gold to make up for lost energy caused by the shuttering of the country’s nuclear power stations.
In Sydney the biggest casualty was Santos, which plunged 13.00 per cent, while BHP Billiton lost 3.37 per cent and Woodside was off 7.07 per cent.
Hong Kong-listed shares in CNOOC shed 5.50 per cent and PetroChina sank 3.33 per cent.
However, Asian airlines – whose main cost is fuel – soared. In Hong Kong, Air China jumped 6.44 per cent and Cathay Pacific gained 5.04 per cent, while Tokyo-listed Japan Airlines added 5.28 per cent and rival ANA jumped 7.39 per cent. Qantas gained 6.96 per cent in Sydney and Korean Airlines was up 4.74 per cent in Seoul.
On foreign exchange markets the euro was mixed after sinking on Thursday in reaction to speculation the European Central Bank could begin buying government bonds as part of a monetary easing drive.
The euro bought $1.2459 against $1.2460 and 147.25 yen compared with 146.74 yen.
The yen came under pressure again after data showed inflation slowing in October from the previous month.
The dollar was trading at 118.17 yen, up from 117.74 yen in London.
Gold was at $1,187.61 an ounce, compared with $1,196.58 late Wednesday.