Crude jumped more than 1%, extending gains into a third straight trading day after being pummelled to 10-month lows on Wednesday on fears that output cuts by Opec and Russia will fail to avert another global supply glut.
The drop had led to a sell-off in regional energy firms but the slight recovery provided some relief yesterday, with Tokyo-listed Inpex rallying 1.81%, while Woodside Petroleum in Sydney and CNOOC in Hong Kong also advanced.
Adding to the upward pressure for oil is the crisis in the Middle East, where a Saudi-led blockade of Qatar has fuelled concerns of possible conflict.
However, analysts warned that the oil gains would likely be limited as US firms keep bringing more rigs online.
Sukrit Vijayakar of Trifecta Consultants noted prices had fallen 20% in the first six months of 2017, a level of decrease not seen since 1997. “The bulls are willing Opec to do something (though we are not sure what they would want Opec to do).”
On Asian equity markets Japan’s Nikkei ended 0.10% higher.
Tokyo-listed airbag maker Takata was suspended after the crisis-hit firm filed for bankruptcy protection.
The company faces lawsuits as well as massive costs after deadly faults in its airbags triggered the auto industry’s biggest ever safety recall.
Hong Kong ended 0.8% higher and Shanghai closed up 0.9%. Sydney put on 0.1% and Seoul was 0.4% higher.
There were also healthy gains in Taipei, Wellington and Bangkok. Traders are also watching Washington, where Republicans look to be having trouble pushing through a controversial healthcare bill to replace Obamacare.
Senate leaders last week unveiled a revamped health plan but have so far failed to garner enough support to pass it with only Republican votes – even though the party has a majority in the Senate – after a handful of GOP lawmakers revolted.
Failure to push through one of Trump’s key policies, even with a majority in both houses of Congress, could throw a spanner in the works for his other goals, including tax reform and massive infrastructure spending.
“We’ll see if it actually comes to the floor for a vote. But if it does not, or if it is defeated, the path to Trumponomics and the economic stimulus becomes so much harder,” said McKenna.
