All Asian indices including China’s Shanghai Composite were trading lower on Wednesday 24 February. The decline was attributed to the negative close overnight on Wall Street and FTSE, as oil prices lowered after a warning from Saudi Arabia Oil Minister Ali al-Naimi.
At the IHS CERAWeek conference held in Houston on Tuesday, 23 February, al-Naimi, accused other major oil producers of not putting in efforts required to freeze output, which would stabilise crude prices. He said, “It’s not going to happen. [There is] no sense wasting our time seeking production cuts.”
His claim indicated that there is almost no hope for a cut in oil production, which led to a fall in crude prices. Talking about al-Naimi’s comments, Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank said, “I suspect few people were expecting a deal to cut production so his [al-Naimi’s] comments are hardly a surprise. Yet, the latest development seems to suggest that for oil producers to get more united they will have to feel more pain.”
Indices in Asia traded as follows on 24 February at 5.52am GMT:
||Shanghai Composite Index
||Hang Seng Index
Overnight, the Dow Jones Industrial Average closed lower by 1.14% at 16,431.78, while the FTSE 100 closed 1.25% lower at 5,962.31.
Among commodities, crude that has been on a downtrend for more than 18 months, continued to decline in reaction to al-Naimi’s statement. WTI crude oil was trading at $31.11 (£22.26, €28.24) a barrel, down, 2.38%, while Brent crude was down 1.38% at $32.81 a barrel on 24 February at 5.59am GMT.