TOKYO, Nov 26: Oil prices recovered on Tuesday after the previous session’s slide as traders questioned how quickly the Iranian nuclear accord could translate into higher supplies, while Asian shares got off to a cautious start.
The yen came off a six-month low against the dollar and a four-year trough versus the euro.
U.S. Crude prices added 0.4 percent to above $94.40 a barrel, recouping some of the previous session’s 0.8 percent decline following a weekend deal between the West and Tehran to halt Iran’s most sensitive nuclear activities in exchange for some relief from crippling sanctions.
‘The interim six-month ‘freeze’ agreement just reached on Iran’s nuclear programme should not have any impact on oil prices, aside from short-term sentiment, because core sanctions on oil and banking have not been touched,’ Societe Generale said in a note.
‘We see a greater than 50 percent chance that a comprehensive agreement will be successfully reached within six months.
‘If and when that happens, it could take Iran three to nine months to recover the one million barrels per day in production lost since 2011.’
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat after a 0.3 percent rise in the previous session on the back of the Iranian deal.
Thai assets looked set to come under further pressure on heightened political uncertainty as anti-government protesters forced their way inside the country’s Finance Ministry and burst through the gates of the Foreign Ministry compound, in a bid to oust Prime Minister Yingluck Shinawatra.
On Monday, the Thai SET index fell for a fifth straight session to an 11-week closing low and the baht tumbled to a two-week low versus the dollar.
NIKKEI OFF PACE
Tokyo’s Nikkei share average shed 0.9 percent after it climbed 1.5 percent on Monday to within sight of a 5-1/2 year peak reached in May.
The Japanese currency, which typically falls when share prices rise, was up 0.3 percent at 101.38 yen to the dollar and up 0.2 percent at 137.185 to the euro.
Minutes of the Bank of Japan’s Oct. 31 meeting showed some board members said they saw economic growth and prices at risk of declining, underscoring lingering pessimism within the board on the outlook for meeting its inflation target.
The euro inched up 0.1 percent to $1.35320, having fallen 0.3 percent overnight.
‘We remain bullish on the dollar heading into 2014 but remain tactically cautious on establishing longs, with a number of U.S. Dollar pairs already trading at the high end of their ranges and data unlikely to be consistent enough to support expectations for an early tapering,’ analysts at BNP Paribas wrote in a note.
Data showed on Monday that contracts to buy previously-owned U.S. Homes fell for a fifth straight month in October, hitting a 10-month low and adding to signs of cooling in the housing market.
U.S. Stocks ended mixed overnight, with the Dow Jones industrial average posting a slim gain to end at another record high, while the S&P 500 eased 0.1 percent. (agencies)
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