Monday’s solid bank-driven gain will be reversed on the ASX today with the futures market pointing to a 30 point – plus drop in the wake of another night of losses for oil prices.
The ASX 200 was up 37 points yesterday – the futures market had the index down 36 points at the open this morning.
On top of that the Aussie dollar fell to a new four year low of 82.60 US cents in trading overnight, as the US dollar’s recent rise ended.
The big driver of falls in markets in the US and Europe was another night of selling in oil – despite the weaker greenback which is normally good news for commodity prices.
Crude-oil prices fell to a succession of five-year lows in European and US trading as an oil major in ConcoPhillips Monday led the way in revealing billions of dollars in cuts in exploration and development spending for 2015.
This is seen as the first of what will be a long list of companies large and small in energy slashing spending to handle the 40% plus slide in oil prices. Oil and gas companies here led by Santos and Woodside have already started cutting costs.
On top of that, prices were pressured by forecasts from groups led by Morgan Stanley that the global oversupply of oil will persist well into the first half of next year.
In fact Morgan Stanley revealed a target low price for oil of around $US43 a barrel, and the prices of Brent and West Texas crude promptly started reaching down to that level with falls of more than 3% and over 4% respectively overnight Monday.
US crude futures in New York traded at just over $US63 a barrel just after 8am today – a fall of 4.2% on the day. This was the lowest prices for the US marker crude have been since July 2009.
January Brent crude in London’s also dropped or 4.2%, to settle at $US66.19 a barrel – the lowest since late September, 2009.
Gold though edged higher as the US dollar’s rise came to an end – it was trading around $US1,206 in New York at 8am Tuesday, a rise of $US16 an ounce.
