Energy shares lead Asian stock losses as oil falls under $45

Both main contracts tanked nearly five percent Thursday on fears about increased production from the US, Libya and Nigeria and the OPEC cartel's commitment to extending an output cut beyond a six-month agreement.

Crude oil prices were swinging heavily early Friday as traders balanced strong USA labor figures against faltering optimism surrounding an OPEC balancing act.

USA crude CLc1 pulled back 0.25 percent to $47.69 a barrel.

The central bank is expecting to lift borrowing costs next month but with the oil price crisis returning policymakers could be more reticent owing to the possible impact on inflation.

Just over 13 percent of USA retailers are at the distressed tier of Moody's ratings spectrum, the highest percentage since the 2008-2009 recession, Moody's debt rating service said in February.The New York-company's stock was down 23 percent at $19.40, the lowest level since 2013.

"The whole commodity complex has been affected by this and it could have some pretty big implications if it continues for much longer", said Saxo bank's head of FX strategy John Hardy.

A combination of resilient USA shale output and surprisingly sluggish demand for gasoline from American drivers has kept US oil stockpiles at historically high levels.

But shale is on the comeback trail now, aided by technological advances and leaner business models that have allowed companies to pump profitably at far lower prices than before. "Metals have been a leading indicator of stock prices for much of the a year ago".

The Permian Basin, a shale hotbed in Texas and New Mexico, has been the particularly strong.

And while actual production figures from OPEC members are lower, what's showing up on the market paints a different picture.

Silencing critics who predicted OPEC would cheat its own quotas, the cartel has shown considerable restraint this time around by overwhelmingly complying with its supply cut agreement.

The nosedive has intensified in recent days.

Al-Aama said he had accompanied Saudi Energy Minister Khalid Al-Falih on a visit last week to some of the non-OPEC producers that are party to the pact, and "all have expressed their commitment to the deal". Production there has been stronger than expected.

"I think now this election is no longer an issue and the market is already starting to focus on new issues: inflation, the (euro zone) economy, and the US data", said DZ Bank strategist Daniel Lenz.

Drivers could be reacting to the fact that while prices at the pump remain low, they are higher than past year.

All of this adds to the pressure on OPEC, which is meeting on May 25 in Vienna.

"But if you add a slowdown in China", she said, "it becomes a demand story". Support is building within OPEC to extend its oil production cuts by an additional three or six months, senior Gulf officials previously told CNNMoney.

  • Zachary Reyes