Hong Kong - Oil touched its lowest level since 2009, dragging Asian energy shares down amid increased projections for US production. The dollar weakened from its strongest in more than a decade to major peers ahead of this week’s Federal Reserve meeting.
West Texas Intermediate crude dropped 1 percent to $44.39 a barrel by 11.21am in Tokyo, after earlier falling to as low as $43.57. A gauge of energy producers dropped the most among the 10 industries on the MSCI Asia Pacific Index. Standard & Poor’s 500 Index futures were little changed. The Bloomberg Dollar Spot Index fell 0.2 percent as the greenback weakened 0.3 percent to $1.0525 per euro, after reaching its strongest level since January 2003.
US oil dropped 9.6 percent last week and speculators cut bullish wagers to the lowest in more than two years as falling rig counts fail to cool a supply glut. The Fed may remove the word “patient” from its statement this week, giving it more flexibility on the timing of potential rate increases. The euro is heading for its biggest ever quarterly loss versus the dollar after the region’s central bank took deposit rates below zero and began buying bonds as tries to stave off deflation.
“Crude has performed even worse with the strong dollar as it’s been having its own demand and supply issues,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “We are seeing diverging monetary policies between the Federal Reserve and other major central banks, especially the ECB. Investors are curious whether the Fed will raise rates in June.”
Brent slide
West Texas Intermediate crude lost 4.7 percent on Friday, and capped a fourth straight a weekly retreat. Brent, the benchmark contract for more than half of global oil, fell 0.9 percent to $54.17 per barrel following Friday’s 4.2 percent retreat.
The US surplus may soon strain the country’s storage capacity, renewing the slump in oil prices, the International Energy Agency said on Friday. Hedge funds and other money managers reduced their net-long position in WTI by 2.5 percent in the seven days ended March 10, US Commodity Futures Trading Commission data show.
South Korea’s S-Oil Corporation tumbled 4.1 percent and Japan’s Inpex retreated 3.6 percent. Santos Ltd, Australia’s No. 3 producer, fell 2.1 percent while BHP Billiton Ltd, the world’s biggest miner, decreased 0.9 percent.
Anger over alleged bribes and kickbacks at Brazil’s state-run oil producer Petroleo Brasileiro SA brought more than 1 million people to the streets on Sunday demanding President Dilma Rousseff’s impeachment. The Next Funds Ibovespa Linked Exchange Traded Fund, which tracks Brazilian shares, dropped 1.2 percent in Tokyo.
Dollar, won
The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, climbed 0.8 percent on Friday to its highest level in data going back to the end of 2004.
The won slipped a sixth day, losing 0.5 percent to 1,135.63 per dollar and touching its weakest level since July 2013. Korea’s currency retreated 2.7 percent last week, the most since 2011, as the central bank unexpectedly cut interest rates. Malaysia’s ringgit dropped 0.4 percent to 3.6995 a dollar.
The Australian dollar added 0.1 percent to 76.45 US cents, after sliding 0.9 percent on Friday. Minutes of the Reserve Bank of Australia’s March 3 meeting, when the key rate was held at 2.25 percent after a cut in February, are due on Tuesday.
Investors raised their bearish bets on the Australian dollar to a record as BlackRock, the world’s largest money manager, expects the currency to plunge to levels well below what the RBA prefers. Traders wager there’s a 50 percent change the RBA will reduce borrowing costs again within six months, according to data compiled by Bloomberg from swap contracts.
* With assistance from Ben Sharples in Melbourne and Emma O’Brien in Wellington
Bloomberg