Shares in Asia slump as falling oil prices hit Chinese, Australia firms

Investing.com - Asian shares fell on Thursday as weak oil prices overnight weighed on Chinese state-owned energy companies and major oil producers in Australia in particular.

The Hang Seng Index fell the most in early trading, shedding 1.3% to 23226.43. CNOOC Ltd (HK:0883) lost 3.6%, China Petroleum & Chemical Corp (HK:0386) was down 2.2% and Kunlun Energy Co Ltd PK (OTC:KLYCY) fell 3.0%.

In Australia, energy stocks were led lower by Horizon Oil Ltd (ASX:HZN), whose stock fell 10.5%.

The country's third-largest oil company, Santos Ltd (ASX:STO), fell 5.4% after it said it would slash capital spending by 26% next year and consider asset sales. The firm is trying to fortify its balance sheet against tumbling oil prices. Among Australia's large-cap oil companies, it has been the hardest hit by crude oil's plunge.

The broader S&P ASX benchmark fell 0.3% to 5244.50.

In Hong Kong, the few gainers included Cathay Pacific Airways Ltd (OTC:CPCAY), whose stock was up 1.9%.

Another bright spot was the mainland market. The Shanghai Composite Index gained 0.3% to 2949.18, shaking off a string of volatile sessions and extending Wednesday's 2.9% gain.

Overnight, plunging oil prices sent energy stocks falling on Wednesday, bringing broader equities indices down with them, especially on news global oil cartel OPEC expects demand to fall next year, a sign the global economy may be cooling the pace of its recovery.

At the close of U.S. trading, the Dow 30 fell 1.51%, the S&P 500 index fell 1.64%, while the Nasdaq Composite index fell 1.73%.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories increased by 1.5 million barrels in the week ended Dec. 5, confounding expectations for a decline of 2.5 million barrels, which stoked demand concerns.

Total U.S. crude oil inventories stood at 380.8 million barrels as of last week.

The report also showed that total motor gasoline inventories increased by 8.2 million barrels, above expectations for a gain of 2.6 million, while distillate stockpiles rose by 5.6 million barrels.

Elsewhere, the Organization of the Petroleum Exporting Countries' monthly report released earlier showed that its collective crude output fell by 390,100 barrels a day in November to a total of 30.05 million barrels.

According to the agency, the decline was led by Libya, which cut production by approximately 248,300 barrels per day to 638,000.

Saudi Arabia's output fell by 60,100 barrels a day to 9.59 million barrels a day, while production in Kuwait dropped by 59,400 barrels a day to 2.69 million barrels a day

OPEC also forecast that demand for the group's oil will drop to 28.9 million barrels a day next year, down from 29.4 million barrels a day in 2014, which exacerbated Wednesday's losses on stock markets by stoking fears global recovery faces headwinds.

OPEC decided to maintain its output target at 30 million barrels a day last month, disappointing hopes the oil cartel would lower production to support the market, as a surplus develops amid the shale boom in the U.S., which is pumping at the fastest pace in more than 30 years.

Iraq’s state-run oil company lowered official selling prices for its crude in January, following a similar move from Saudi Arabia, indicating that OPEC exporters are stepping up a battle for market share with cheaper U.S. shale oil.

On Thursday, the U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.