While international crude oil prices dropped below the $100 a barrel-mark this week, data released…
NEW DELHI(REUTERS): Asian shares edged higher on Tuesday, taking solace from Wall Street gains and some stability in recently weak crude oil prices, though gains were capped by caution ahead of this week’s holidays.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched 0.1% higher, after Wall Street logged solid gains overnight after it followed a losing week. Australia’s S&P/ASX 200 index added 0.3%.
China’s CSI300 index was down 0.3% and the Shanghai Composite slipped 0.2%, as both gave back some of the previous day’s rally.
Japan’s Nikkei stock index was down 0.1%, though off its session lows.
“The mood will likely depend on moving oil prices for now,” said Yutaka Miura, a senior technical analyst at Mizuho Securities in Tokyo.
US and most European markets will close on Friday for Christmas. While Christmas is not a public holiday in Japan, markets will be closed on Wednesday to observe the emperor’s birthday.
US crude futures extended early gains and added about 0.7% to $36.06, pulling above a 2009 low of $33.98 a barrel hit in the previous session.
Brent crude oil futures added 0.3% to $36.46 after it skidded to a low of $36.04 on Monday, their lowest price since July 2004, as demand for heating oil slipped on warmer-than-normal temperatures.
In addition to a supply glut, crude prices have weakened in line with the dollar’s appreciation ahead of the US Federal Reserve’s widely anticipated interest rate hike earlier this month. Oil is priced in dollars, so any rise in the greenback makes it more expensive for buyers holding other currencies.
“The price of oil could fall below $30 a barrel but we do not see much weakness beyond that, and by the end of the year we expect prices to settle closer to $40,” said Kathy Lien, managing director of FX strategy for BK Asset Management in New York, adding, “when the dollar peaks, commodities will bottom.”
In the long run, she said in a note to clients, “China’s focus on domestic demand should be positive for energy prices.”
The dollar index , which tracks the greenback against a basket of six rival currencies, edged up about 0.1% to 98.437, but remained below a two-week high of 99.294 marked on Thursday.
The dollar added about 0.1% to 121.26 yen, while the euro was nearly flat from late North American levels at $1.0914.
The euro rose on short covering on Monday following a weekend election in Spain, even after no party won a clear mandate in the euro zone’s fourth biggest economy.
Spot gold took a breather from its recent gains and was down about 0.1% at $1,076.88 an ounce after it rose 1.2% on Monday and 1.4% on Friday as investors covered short positions ahead of the holidays.