SYDNEY : Asian shares extended a global rally on Monday on optimism the Federal Reserve would pause its rate hikes this month after a mixed U.S. jobs report, while oil jumped as Saudi Arabia pledged big output cuts in July.
Brent oil jumped $1.82, or 2.4 per cent, to $77.95 a barrel, while U.S. crude climbed $1.77, or 2.4 per cent, to $73.51. Oil prices have recently come under pressure amid heightened concerns about China’s slowing economic recovery.
Oil rose as Saudi Arabia announced it would cut its output to 9 million barrels per day in July, from around 10 million bpd in May, the biggest reduction in years, while a broader OPEC+ deal to limit supply into 2024 also underpinned futures.
“With Saudi Arabia protecting oil prices from sliding too low … we think oil markets are now more prone to a shortfall later this year,” said Vivek Dhar, a mining and energy commodities strategist at Commonwealth Bank of Australia.
“We think Brent futures will rise to $US85/bbl by Q4 2023 even with a tepid demand recovery in China factored in.”
On Monday, Japan’s Nikkei surged 1 per cent to a 33-year high, Australia’s resources-heavy shares gained 1 per cent and South Korea’s KOSPI rose 0.5 per cent.
S&P 500 futures dipped 0.1 per cent and Nasdaq futures dropped 0.3 per cent in Asian hours, after a strong rally on Friday, driven by a mixed U.S. jobs report, a resolution to the debt-ceiling issue and the prospect of a U.S. rate pause this month.
Source: Reuter
