Key points
- Production hike plans add to concerns about over-supply
- The price of crude has already been sliding
- Fears of global economic slowdown linger
ISLAMABAD: Oil prices fell more than $2 a barrel in early Asian trade on Monday as OPEC+ is set to further speed up oil output hikes, spurring concerns about more supply.
Brent crude futures dropped $2.04 a barrel, or 3.33 per cent, to $59.25 a barrel by 2240 GMT while US West Texas Intermediate crude was at $56.19 a barrel, down $2.10, or 3.60 per cent, according to Reuters.
The output increase of 411,000 barrels a day announced by Saudi Arabia, Russia and six other members of the oil cartel on Saturday added to concerns about over-supply.
The price of crude has already been sliding because of fears of a global economic slowdown on the back of US President Donald Trump’s tariff onslaught.
OPEC+ throws a bombshell
“OPEC+ has just thrown a bombshell to the oil market,” Jorge Leon, analyst with Rystad Energy, told AFP.
“(Saturday’s) decision is a definitive message that the Saudi-led group is changing strategy and pursuing market share after years of cutting production,” he added.
OPEC+ has just thrown a bombshell to the oil market.” – Rystad Energy analyst Jorge Leon
On equity markets, Tokyo was closed for a holiday along with Hong Kong and mainland China. Taiwan edged lower while the Jakarta Composite Index gained.
Solid gains
The Australian dollar gained against the US dollar after Prime Minister Anthony Albanese’s election victory on Saturday, while the S&P/ASX 200 fell almost one per cent.
Wall Street stocks concluded a strong week on a winning note Friday, notching solid gains on good US jobs data and improving sentiment about US-China trade talks.
In Europe, Paris and Frankfurt rose over two per cent as markets brushed off official data showing eurozone inflation remained unchanged at slightly above the European Central Bank’s two-per cent target.
Chinese demand
London also gained ground, with mining and commodity stocks — sensitive to Chinese demand — performing particularly well amid optimism for the potential Beijing-Washington talks, according to analysts.
Stephen Innes at SPI Asset Management said that the “market (is) catching its breath before the next directional catalyst drops”.
This could come from progress — or an absence of it — in easing trade tensions between the United States and China or budget negotiations in Washington.
Key figures at around 0300 GMT
Tokyo – Nikkei 225: closed for holiday
Hong Kong – Hang Seng Index: closed for holiday
Shanghai – Composite: closed for holiday
Euro/dollar: UP at $1.1341 from $1.1299 on Friday
Pound/dollar: UP at $1.3295 from $1.3268
Dollar/yen: DOWN at 144.14 yen from 144.97
Euro/pound: UP at 85.31 pence from 85.14
West Texas Intermediate: DOWN 3.8 per cent at $56.08 per barrel
Brent North Sea Crude: DOWN 3.5 per cent at $59.17 per barrel
New York – Dow: UP 1.4 per cent at 41,317.43 (close)
London – FTSE 100: UP 1.2 per cent at 8,596.35 (close)
