HONG KONG (AFP) – Oil prices struggled at seven-year lows Tuesday, sending Asian energy firms plunging in line with their US and European counterparts after OPEC s decision to maintain output dimmed hopes for a recovery in the black gold.
Another tumble in Chinese imports and exports exacerbated the panic on regional markets, reinforcing worries about the state of the world economy at the same time as Washington considers hiking US interest rates.
A global supply glut, weak demand and the growth slowdown in China have combined with soaring production over the past year to send crude slumping more than 60 percent over the past 18 months.
Investors had been hoping that with the market becoming increasingly tight, the Organization of the Petroleum Exporting Countries could find a way to ease output and release some pressure on prices.
However, the cartel s six-monthly meeting Friday ended without any agreement between bickering members to make any cuts, which in turn battered global markets.
On Monday, US benchmark West Texas Intermediate crude sank 5.8 percent and Brent shed 5.3 percent — hitting levels not seen since February 2009. WTI tumbled 2.7 percent and Brent lost 1.9 percent Friday.
US giant ExxonMobil, France s Total and Italy s Eni all fell between two and three percent, with many smaller producers and oil-services companies suffering even bigger drops.
And Asian firms continued those losses as crude failed to recover. Hong Kong-listed Chinese giant CNOOC was down more than three percent, while PetroChina was off 1.4 percent in Shanghai.Mining giant BHP Billiton dived almost five percent in Sydney, while Rio Tinto was off 3.5 percent. Woodside lost 3.5 percent and Oil Search plunged 15.8 percent after Woodside dropped a multi-billion-dollar bid for the latter without an explanation.
Japan s Inpex was off 5.4 percent while JX Holdings lost 3.2 percent.
“Market focus at the moment is the potential deflationary effects of lower oil prices, and the signalling that aggregate demand is weak,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Bloomberg News.
Commodity-linked currencies took a hit from the falls, with Malaysia s ringgit down one percent and the Australian dollar losing 0.1 percent.
In China, investors were hit by another round of weak trade data indicating the world s number two economy and key driver of global growth is heading for its worst year in a quarter of a century.
“Given the weak global growth and falling commodity prices, China s trade outlook remains challenging,” Larry Hu, Head of China Economics at Macquarie Securities in Hong Kong, wrote in a report ahead of the figures.
The plunge in oil prices and news from China overshadowed data out of Tokyo showing Japan s economy grew slightly in July-September, meaning it averted a recession, as was initially thought from provisional results last month.
However, Hideo Kumano, chief economist at Dai-ichi Life Research Institute, said: “While severe pessimism is receding, consumption — a key driver for the economy — is still weak. Without more spending and higher wages, the engine of the economy won t be ignited.”