Oil prices stabilize after Iran deal, Asian shares steady

TOKYO Mon Nov 25, 2013 6:27pm EST

1 of 10. A man walks through the lobby of the London Stock Exchange August 5, 2011.

Credit: Reuters/Suzanne Plunkett

TOKYO (Reuters) - Oil prices stabilized 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 regained some poise following Monday's steep decline to a six-month low against the dollar and a four-year trough versus the euro.

U.S. crude prices added 0.2 percent to above $94 a barrel, pausing after 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 program 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 .MIAPJ0000PUS inched up 0.1 percent, adding to 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 .SETI fell for a fifth straight session to an 11-week closing low and the baht tumbled to a two-week low versus the dollar.

Citigroup said the Iranian nuclear deal could be a "get-out-of-jail-free card" for current account deficit countries, such as India, Indonesia and Turkey, which face a liquidity drain when the Federal Reserve eventually tapers in the coming months.

Tokyo's Nikkei share average .N225 was likely to take a breather, with futures pointing to a weaker open 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 price rise, was up 0.2 percent at 101.52 yen to the dollar and up 0.1 percent at 137.27 to the euro.

The euro was little changed at $1.35195, 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 .DJI posting a slim gain to end at another record high, while the S&P 500 .SPX eased 0.1 percent.

(Editing by Shri Navaratnam)

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Comments (8)
jim4justice wrote:
Americans will prosper. “Oil exports from Iran will be about 1 million barrels a day. This sets the table for lower prices in the future,” Cheaper oil means Americans can have more money in their pockets and our economy can grow.
Big multinational oil corporations who are in it for profits
do not care about America. Big oil’s propaganda machine is well oiled
and will come out swinging. Yea team America. It is about time.

Nov 24, 2013 10:42pm EST  --  Report as abuse
ALAN_PW7 wrote:
It may sound like risk but, the risk is to the investor who gets stuck with high priced oil that can be undercut by the new boy in town…Iran. There will always be turmoil. There will always be oil supplies. There will always be speculators working on keeping the price high. There will always be the clever guy who will sell low and still make a bundle.

Nov 24, 2013 11:08pm EST  --  Report as abuse
RD137 wrote:
Obama’s “Syrian conflict” not panning out, along with a weak hurricane season in the US, didn’t give all the big oil manipulators the huge pay-off they were looking for this year.

But, even with new Iranian oil coming back into the mix, I’m confident the manipulators can still find a way to get gasoline back to $4 a gallon soon. There’s no way the rich 1% can afford to ease up on gas prices or let wage increases happen for the working poor and middle class, because that would spark inflation risks to the broader economy…which then means QE 4,5,6,7,8, etc. (free, easy money printing at the FED) would have to come to an end.

And we certainly can’t have that.

Nov 25, 2013 2:10am EST  --  Report as abuse
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