Asian, European stocks rally after OPEC agreement

Agence France-Presse . Hong Kong

Energy firms led a rally in Asian and European stock markets Thursday, while high-yielding currencies advanced after OPEC’s shock agreement to cut oil output sent crude prices soaring.
The gains come after OPEC’s ‘historic’ announcement late Wednesday of a deal — the first of its kind in eight years — lit a fire under petroleum-linked shares in New York.
At the end of six hours of negotiations and weeks of horse trading, the 14-member group unveiled the plan to cut production by 7,50,000 barrels.
The news came as a surprise to many market-watchers who had feared the fractious body would not be able to reach a consensus.
However, Iran — whose refusal to limit output caused a similar meeting to break down in April — will not join the reduction, a major concession from OPEC kingpin and bitter rival Saudi Arabia.
Details of the cuts will be agreed at the group’s twice-yearly meeting on November 30.
‘Today OPEC has taken a historic decision,’ said Algerian energy minister Noureddine Boutarfa, adding that the move had been agreed on unanimously.
The announcement was immediately cheered on oil markets, with West Texas Intermediate soaring more than five per cent and Brent tacking on almost six per cent.
Traders have been praying for a cut as a global supply glut and overproduction have hammered prices for the past two years, sending them to near 13-year lows to below $30 at one point in early 2016.
‘OPEC pulled the oil rabbit out of the hat last night, agreeing a modest production cut that blindsided the market,’ Jeffrey Halley, senior market analyst at OANDA, said in a note.
‘The nuts and bolts will be thrashed out at the November 30th OPEC meeting and it is Saudi Arabia who has clearly blinked first, allowing Iran, its main rival, to ramp up production.’
While crude dipped Thursday — WTI fell 16 cents and Brent lost 36 cents — energy firms soared.
In Hong Kong CNOOC piled on more than five per cent and PetroChina added three per cent, while Sydney-listed Woodside Petroleum was up more than seven per cent and BHP Billiton added 4.7 per cent.
Inpex in Tokyo rocketed 5.7 per cent and Japan Petroleum Exploration rocketed 8.8 per cent.
The gains pulled regional stock markets higher, with Tokyo ending up 1.4 per cent, while Shanghai closed up 0.4 per cent and Hong Kong added 0.5 per cent.
Sydney climbed 1.1 per cent, and Seoul and Taipei put on 0.8 per cent each. There were also strong gains in Singapore, Manila and Wellington.

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