Oil Rises as U.S. Supplies Drop, Asia Stocks Decline on HSBC

By Christian Schmollinger and Shani Raja
Nov. 18 (Bloomberg) -- Crude oil gained for a third day as an industry report showed U.S. stockpiles declined after a Gulf of Mexico hurricane. Most Asian stocks fell, as concern banks and property developers will sell shares overshadowed advances among telecommunications companies.
Oil rose as much as 0.9 percent to $79.85 a barrel in electronic trading on the New York Mercantile Exchange after the American Petroleum Institute said crude inventories fell by 4.37 million barrels last week to 333.1 million. The MSCI Asia Pacific Index lost 0.1 percent to 118.41 as HSBC Holdings Plc’s chairman voiced concern over new capital rules and property developer Tokyo Tatemono Co. announced plans to sell shares.
Oil has risen 79 percent this year on signs the global economy is recovering from its worst recession since World War II, stoking fuel demand amid output cuts by the Organization of Petroleum Exporting Countries. Growing needs for raw materials, led by China, have made stocks of commodity producers the biggest gainers this year in Asian markets. The MSCI Asia Pacific Index has advanced 33 percent as governments cut interest rates and boosted spending to rescue flagging economies.
"Pursuing a low interest rate policy doesn’t make it favorable to hold dollars so buying commodities has been one of the strategies investors have been able to take," Alan Plaugmann, head of futures at Saxo Bank A/S, said in a Bloomberg Television interview. "We’re seeing the rally in crude, the rally in equities and the rally in gold all highly correlated."

UBS Raises Forecast

Energy producers in the U.S. idled about 43 percent of oil output in the Gulf of Mexico on Nov. 10 after Hurricane Ida made landfall, according to the Interior Department’s Minerals Management Service. An Energy Department report due today will probably show stockpiles of crude climbed 300,000 barrels, according to the 17 analysts who provided estimates.
UBS AG raised its forecast for oil because of a weaker dollar and improved demand from developing nations, particularly China, the world’s second-largest energy consuming-nation.
UBS increased its 2010 projection for West Texas Intermediate to $75 a barrel from $70 and its 2011 assumption to $80, analysts led by Melbourne-based Gordon Ramsay said in a note dated yesterday.
Gold for immediate delivery fell 0.2 percent to $1,138.72 an ounce at 2:27 p.m. in Singapore after touching a record $1,144.42 in earlier trading.
The International Monetary Fund said this week it sold 2 metric tons of gold, valued at about $71.7 million, to Mauritius.
The sale followed India’s $6.7 billion purchase of 200 tons, which was announced earlier this month. The IMF plans to sell a total of 403.3 tons to bolster its finances.

‘Unintended Effects’

In Hong Kong, HSBC, Europe’s largest lender, lost 1.7 percent to HK$95.70 as Chairman Stephen Green warned of the "unintended effects" from new rules to increase banks’ capital.
"Cumulative enhancement of capital ratios at the wrong stage of the economic cycle could easily withdraw credit from the economy and cause a new credit crunch," Green said at a conference in London yesterday.
Developer Tokyo Tatemono Co. sank 17 percent to 323 yen on plans to sell 45.6 billion yen in shares to fund investments in rental property and to repay debt. Tokyu Land Corp. declined 9.8 percent to 295 yen.
"Concerns about capital increases spread through the real- estate industry after Tokyo Tatemono’s plan to raise capital," said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd.
China Mobile Ltd., the world’s biggest phone company by market value, added 1.9 percent to HK$75.70. Chairman Wang Jianzhou said in Hong Kong today that its third-generation service will have 3 million subscribers by the end of the year.
The company had 1.66 million users at the end of September.

Japan Airlines

HSBC’s decline helped drag the Hang Seng Index down as much as 1.2 percent. Japan’s Topix Index sank 0.8 percent and the Nikkei 225 Stock Average fell 0.6 percent. Japan Airlines Corp., which is seeking a state bailout, fell to a record after a report that Japan’s transport minister wouldn’t rule out bankruptcy for the carrier.
The gain in oil didn’t translate to Asian energy stocks.
PetroChina Co., the world’s second-most valuable company, reversed a 0.8 percent gain to trade 0.2 percent lower at 2:35 p.m. in Hong Kong. China Shenhua Energy Co., the nation’s top coal producer, dropped 0.4 percent after earlier adding 1.1 percent in Hong Kong.
South Korea’s Kospi stock index rose 1.1 percent to
1,603.97 on the Korea Exchange, the most among Asian markets today. The Kospi has risen 43 percent this year, the worst performer among Asian emerging markets.

Yuan Speculation

Traders reduced bets on an appreciation in the yuan after U.S. President Barack Obama failed to win agreement that the exchange rate should be set by the market in meetings in Beijing.
Twelve-month non-deliverable forwards for the yuan fell 0.1 percent to 6.6300 per dollar, bringing the three-day decline to 0.6 percent.
Obama said yesterday he emphasized in talks with Chinese counterpart Hu Jintao that the rate, fixed at 6.83 per dollar since July 2008, be set by the market. China’s vice foreign minister, He Yafei, told reporters that the currency’s stability has helped settle financial markets.
The Australian and New Zealand dollars fell for a second day after U.S. industrial production growth slowed, discouraging demand for higher-yielding assets. Australia’s currency dropped
0.2 percent to 92.87 U.S. cents at 4:13 p.m. in Sydney.
Australia’s currency trimmed this month’s gain to 3.1 percent as traders pared bets that the Reserve Bank of Australia will raise borrowing costs at its next meeting.

Yen Declines

The yen retreated from near a two-week high versus the euro on speculation U.S. government reports will show housing starts rose and building permits gained last month. The U.K. currency was near a two-month high against the euro before the Bank of England releases minutes of its Nov. 5 meeting where policy makers expanded their asset-buying program by 25 billion pounds
($42 billion) to 200 billion pounds.
Japan’s 20-year bonds were little changed on speculation some dealers sold the securities to try to increase the coupon at an auction of the debt tomorrow.
Ten-year notes earlier fell as technical charts signaled that the drop in 10-year yields toward a one-month low of 1.3 percent was too rapid. Trading today suggests the Ministry of Finance will set a 2.1 percent coupon on the 1.1 trillion yen ($12.3 billion) of new 20-year bonds.