Oil Extends Decline Below $40 as OPEC Abandons Production Target

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Oil extended losses below $40 a barrel amid speculation a record global glut will be prolonged as OPEC abandoned its long-time strategy of limiting production to control prices.

Futures dropped as much as 1.9 percent in New York after falling 4.2 percent last week. The Organization of Petroleum Exporting Countries will keep pumping about 31.5 million barrels a day, President Emmanuel Ibe Kachikwu said Friday after a meeting in Vienna. The group is setting aside its output quota of 30 million barrels a day, a target breached the past 18 months, until members gather again in June.

Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision in November 2014 to maintain output and defend market share against higher-cost shale producers. After Friday’s OPEC decision, “everyone does whatever they want,” Iranian Oil Minister Bijan Namdar Zanganeh said. Iran is seeking to increase crude exports next year when international sanctions over its nuclear program are removed.

West Texas Intermediate for January delivery declined as much as 77 cents to $39.20 a barrel on the New York Mercantile Exchange and was at $39.53 at 8:48 a.m. Hong Kong time. The contract decreased $1.11 to $39.97 on Friday. The volume of all futures traded was almost three times the 100-day average. Prices are down 26 percent this year.

Brent for January settlement slid as much as 25 cents, or 0.6 percent, to $42.75 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $3.26 to WTI.

Source: Bloomberg

Asian Stocks Rise After U.S. Jobs Report Buoys Economic Outlook

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Asian stocks rose after a U.S. employment report boosted optimism in the world’s largest economy, with Japanese shares climbing as a weaker yen sent exporters higher.

The MSCI Asia Pacific Index advanced 0.4 percent to 132.62 as of 9:00 a.m. in Tokyo. The Standard & Poor’s 500 Index rose the most in almost three months on Friday, while the yen weakened 0.4 percent against the dollar after the bigger-than-expected increase in American nonfarm payrolls. Japan’s Topix index added 0.9 percent on Monday. The data supports the case for the Federal Reserve lifting interest rates next week, according to Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $115 billion.

South Korea’s Kospi index rose 0.7 percent. Australia’s S&P/ASX 200 Index added 1.2 percent and New Zealand’s S&P/NZX 50 Index advanced 0.2 percent.

Source: Bloomberg

Japanese Stocks Follow U.S. Rebound as Jobs Report Buoys Dollar

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Japanese stocks rallied after a strong U.S. jobs report reinforced confidence in the world’s largest economy and sent the dollar higher against the yen.

The Topix index climbed 0.9 percent to 1,588.83 as of 9:03 a.m. in Tokyo, after sliding 1.3 percent last week. Exporters from Honda Motor Co. to Fanuc Corp. advanced, while energy explorers slipped after OPEC opted not to impose a limit on output. The yen traded at 123.19 per dollar after weakening 0.4 percent on Friday as U.S. non-farm payrolls increased more than economists had expected in November. The Standard & Poor’s 500 Index jumped the most in almost three months.

The 211,000-worker increase in November payrolls compared with economist projections of 200,000, and followed a 298,000 gain a month earlier that was bigger than previously estimated. Traders are pricing in 74 percent odds for a Federal Reserve rate increase next week, while only five of the 73 economists surveyed by Bloomberg see rates left on hold at the Dec. 15-16 meeting.

Japan’s government intends to compile a 3.3 trillion yen ($26.8 billion) extra budget to help low income earners and improve agriculture competitiveness, the Nikkei newspaper reported Dec. 5 without citing a source. The budget will be approved by the nation’s cabinet in the middle of this month, the newspaper said.

Policy makers are considering a property-tax exemption for small- and medium-sized businesses that increase capital expenditure, Economy Minister Akira Amari said in an NHK broadcast on Sunday.

Source: Bloomberg