HONG KONG (APP) – Oil prices ticked lower in Asia while Japanese stocks pared early losses as the dollar strengthened in thin trade Monday, with most markets across the region closed for the Chinese New Year holiday.
A report Friday showing the US jobless rate had fallen to an eight-year low and wage growth picked up fuelled speculation of another hike in the Federal Reserve’s borrowing costs next month, despite the chaos on global stock exchanges.
Crude swung in and out of positive territory after major exporter Saudi Arabia said its oil minister Ali al-Naimi had met his Venezuelan opposite Sunday to discuss the South American country’s talks with other producers to bring boost prices.
The plunge in oil prices to 12-year lows — owing to a severe supply glut, weak demand and a strong dollar — has hammered producer nations such as Venezuela and Nigeria which rely on the commodity’s income to fuel their economies.
However, the OPEC producers’ group — of which Saudi Arabia is the key member — has refused to cut output as it looks to maintain market share in the face of competition from US shale.
US benchmark West Texas Intermediate was down 0.3 percent and Brent eased 0.2 percent. Analysts warned there was unlikely to be a real recovery in prices any time soon. WTI is down almost 20 percent this year and Brent more than 10 percent.
“There are very little signs of abatement on the supply side,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg News.
With most markets closed in Asia, only Tokyo, Sydney, Bangkok and Mumbai were trading. By the break Japan’s Nikkei was 0.2 percent lower, having fallen more than one percent soon after the open.
Sydney slipped 0.3 percent in the afternoon.
The yen retreated against the dollar as dealers saw an increased chance of another US rate hike this year after the January jobs report showed hiring eased but the unemployment rate slipped to 4.9 percent and wage growth increased modestly.
Both support the Fed further tightening policy in the coming months. Until the jobs figures, the Japanese unit had rallied last week on the back of weak US data and comments from officials indicating they will hold off lifting rates at the bank’s policy meeting next month.
The gains also came despite the Bank of Japan adopting a negative interest rate policy, effectively charging lenders to park their cash with it, in a bid to kickstart the economy.