HONG KONG: Energy firms retreated in Asia Wednesday after an oil output freeze by Saudi Arabia and Russia disappointed investors, but crude prices rebounded ahead of a meeting between producer giants Iran and Iraq.
The commodity had enjoyed a surge from Friday to early Tuesday as Moscow and Riyadh — the world’s two biggest producers — prepared for talks on a rout that has seen the cost of a barrel collapse and hammered global markets.
But the conditional agreement between Saudi Arabia — the de facto leader of OPEC — Russia, Venezuela and Qatar to freeze output at record January levels, rather than make cuts, left a bad taste in the mouths of traders,sending both main contracts into reverse.
“The market was expecting a little more — cuts to production, for example, and it’s undeniable that investors aren’t fully satisfied with the pledge,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities.
Eyes are now on historic rivals Iran and Iraq, both OPEC members, to see if they can reach an agreement that would help ease a crippling global supply glut.
“Iraq and Iran are the two countries that are going to contribute to growth from the OPEC nations this year,” Richard Gorry, managing director at JBC Energy Asia in Singapore, told Bloomberg Television.
“Getting an agreement from these is going to be very difficult, particularly in the case of Iran,” he added, referring to the fact the country has only just started exporting after Western nuclear-linked sanctions were lifted.
In early trade, US benchmark West Texas Intermediate was up 1.1 percent and Brent 1.6 percent.
But after a recent rally, energy firms were in retreat. Hong Kong-listed CNOOC fell two percent and PetroChina was more than two percent off, while in Sydney Woodside Petroleum lost 6.5 percent and Rio Tinto was one percent lower.
