Asian energy firms rally on oil surge, but market gains pared

Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea on Mar 21, 2018. (Photo source: AP/Ahn Young-joon)

Comments from new Fed boss Jerome Powell will be pored over in hopes of fresh guidance about its interest rate plans for the rest of the year.

Fears that the US central bank will embark on a sharper pace of rises than previously expected have rattled markets worldwide since the start of February, as traders contemplate the end of a decade of cheap cash that has fired an equities rally.

Stephen Innes, head of Asia-Pacific trading at OANDA, said there would likely be some changes to the bank's previous statements.

"Since the December meeting, inflation has shown signs of coming to life, although the latest round of data would challenge that view," he added.

"But, more significantly, Fed speak has turned marginally more hawkish of late, suggesting we should expect some upgrade to the statement, at the minimum."

Market uncertainty has also been fanned by Donald Trump's controversial tariffs on metals imports and threats of more, which have sparked talk of a global trade war, while the Facebook data breach is also keeping trading cautious.

However, the energy market provided some optimism in Asia on Wednesday after the American Petroleum Institute announced a huge draw in US stockpiles last week, confounding expectations of another rise.

US-SAUDI MEETING

The news provided some hope that demand in the world's top economy is picking up. Official data will be released later Wednesday.

WTI and Brent each jumped more than two per cent Tuesday and extended gains on Wednesday.

Also Tuesday a committee working for the Russia-OPEC group that has capped output said global supplies would balance with demand by the end of September, sooner than previous forecasts.

Analysts added there was also likely support for prices from uncertainty about the Iran nuclear deal, which could spark fresh geopolitical woes. The speculation comes as Saudi Arabian Crown Prince Mohammed bin Salman was in the US.

The prince ramped up pressure on regional arch-rival and fellow crude producer Iran, telling CBS's "60 minutes" the kingdom would follow suit if Iran developed nuclear weapons.

"Iran and the Saudis have faced off a bit more directly. That's ratcheted up a level with the Crown Prince in Washington," said Greg McKenna, chief market strategist at Axitrader.

Energy firms across Asia rose, with CNOOC, PetroChina and Sinopec in Hong Kong all up but by much less than earlier. Sydney-listed Santos was more than one per cent higher and Woodside Petroleum gained 0.4 per cent.

Those gains were not enough, however, to keep all broader markets higher.

Hong Kong finished down 0.4 per cent, having been up more than one per cent, while Shanghai ended 0.3 per cent lower and Seoul was marginally down.

But Sydney rose 0.2 per cent, Wellington jumped more than one per cent and Singapore put on 0.2 per cent, while Jakarta and Bangkok were also up.

Tokyo was closed for a public holiday.

While the overall market in Sydney gained, gaming firm Crown Resorts fell more than one per cent on news that tycoon James Packer had quit as director as he battles "mental health issues".

London and Paris each opened flat, while Frankfurt added 0.3 per cent.

- Key figures around 0820 GMT -

Hong Kong - Hang Seng: DOWN 0.4 per cent at 31,414.52 (close)

Tokyo - Nikkei 225: Closed for public holiday

London - FTSE 100: FLAT at 7,060.60

Euro/dollar: UP at US$1.2278 from US$1.2242 at 2100 GMT

Pound/dollar: UP at US$1.4023 from US$1.3996

Dollar/yen: DOWN at ¥106.38 from ¥106.54

Oil - West Texas Intermediate: UP 11 cents at US$63.65 per barrel (new contract)

Oil - Brent North Sea: UP 11 cents at US$67.53 per barrel

New York - Dow: UP 0.5 per cent at 24,727.27 (close)