HONG KONG (AFP) – Oil prices rose again on Tuesday, extending a recent rally and providing support to regional energy stocks, while Sydney powered higher and the Aussie dollar slumped after Australia’s central bank cut interest rates to record lows.
The euro edged down as investors keep tabs on a tour of Europe by Greece’s new leaders aimed at ramping up support for a renegotiation of its massive bailout.
Crude enjoyed a boost after data showed the recent slump in prices has led to a decline in the number of rigs actively drilling.
US benchmark West Texas Intermediate for March delivery rose 60 cents to $50.17 while Brent crude for March rose 76 cents to $55.51.
The rises will come as welcome relief for markets after prices for the black gold slumped more than 50 per cent from its June 2014 peak owing to a global glut and a strong dollar.
Energy firms were the main winners from the rises. Hong Kong-listed Sinopec added 1.81 per cent and CNOOC gained 3.50 per cent. In Sydney, Woodside closed 3.00 per cent higher and Santos surged 2.63 per cent. Inpex in Tokyo ended 6.89 per cent higher.
“There’s a sense of security expanding among investors” as oil climbs, Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo, told Bloomberg News.
“The rise in prices has helped doubts about the global economic slowdown recede, and eased worry over default risk and downgrade risks for both countries and companies.”
Sydney surged 1.46 per cent, or 82.03 points, to 5,707.37 – its highest since May 2008 – but Tokyo sank 1.27 per cent, or 222.19 points, to close at 17,335.85 owing to a pick-up in the yen against the dollar.
Hong Kong added 0.29 per cent, or 70.04 points, to 24,554.78 and Shanghai rallied 2.45 per cent, or 76.61 points, to end at 3,204.91.
Shanghai’s gains “could be on expectations of some policy easing” after weak manufacturing figures from China on Sunday and Monday, Audrey Goh, a Singapore-based investment strategist at Standard Chartered, told Bloomberg News. “I won’t be surprised to see more easing measures,” she said.
Seoul ended flat, dipping 0.72 points to 1,951.96.
Sydney rallied after the Reserve Bank of Australia cut interest rates to 2.25 per cent as it looks to kickstart the economy in the face of falling commodity prices and rising unemployment.
The news sent the Australian dollar tumbling to 76.59 US cents from around 80 cents before the announcement.
The crude rally also helped Wall Street, where investors ignored data indicating the US manufacturing sector slowed in January.
The Dow rallied 1.14 per cent, the S&P 500 jumped 1.30 per cent and the Nasdaq added 0.89 per cent.
On forex markets the euro bought $1.1336 and 132.90 yen against $1.1343 and 133.43 yen.
Greece’s new far-left government is looking for support from European governments and investors in its bid to renegotiate its 240-billion-euro bailout.
Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis hope to win support from Rome in talks Tuesday, following encouraging remarks from Prime Minister Matteo Renzi who said Europe must abandon austerity.
But there is strong opposition from Germany, while British finance minister George Osborne warned Monday: “It’s clear that the standoff between Greece and the eurozone is fast becoming the biggest risk to the global economy.”
The dollar was at 117.28 yen Tuesday, compared with 117.64 yen in New York Monday.
Gold fetched $1,283.87 an ounce, against $1,274.22 on Monday.