Tokyo - Oil prices resumed their retreat in early Asian trade on Tuesday after enjoying a rare gain overnight, as investors train their sights on the US Federal Reserve's most hotly anticipated policy meeting in years.
After plunging around 12 percent last week crude closed slightly up Monday, but with global demand still weak and no sign of an end to a supply glut, the battered commodity was unable to build up any momentum in Asia.
Energy firms, which have been hammered for months by the sinking oil price - down more than 60 percent since June 2014 - enjoyed some respite.
Hong Kong-listed CNOOC and PetroChina rose, while Woodside Petroleum in Sydney edged up and in Tokyo Inpex also advanced.
However, the decision by the Opec oil exporters' group earlier this month not to cap production levels continues to depress prices and analysts have warned further falls in the black gold could be expected.
Dealers are casting their eyes to Washington, where the Fed on Tuesday begins its two-day policy meeting that most expect to end with its first interest rate hike in nine years.
While analysts say the increase has been on the cards for several weeks, the real interest is in how the central bank manages the rise.
“Investors are focusing on the Fed,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities told Bloomberg News.
“They want to see what the Fed will announce on the target interest rate at the end of 2016. There's market consensus that rates will rise this week, but it is unclear what happens after that.”
The dollar has been subdued in recent sessions, with the euro edging up despite the expected US rate rise and speculation the European Central Bank will go the other way and loosen monetary policy to kickstart the eurozone economy.
“If anything, the trend for the dollar going into the Fed is a little bit on the soft side, as generally speaking it's all about justifying the current positioning rather than pushing it further,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand.
The euro edged up above $1.10 and while the greenback rose to 121.11 yen it is still well off the levels above 123 yen seen last week.
Most regional stock markets rose following a positive lead from Wall Street, where all three main indexes ended in positive territory.
Hong Kong added 0.2 percent after falling for the previous eight days, while Sydney also put on 0.2 percent, Shanghai edged 0.1 percent higher and Singapore rose 0.1 percent.
However, Tokyo slipped 0.7 percent by the break as a stronger yen hurt exporters.
AFP