A new oil setback and gold declines to $1955

2022-03-15T16:36:06
Crude oil gold Russia
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 A new oil setback  and gold declines to $1955 After soaring last week, the oil began to lose all its gains from the Russo-Ukrainian crisis, coming close to falling below $100 per barrel

Evest follows market developments in the following report

CONTENTS

Oil keeps setbacks
More countries reduce their reliance on Russia’s energy supply
The International Monetary Fund predicts an increase in Ukraine’s public debt

Gold falls to $1,955 an ounce

 

Oil keeps setbacks

Oil prices continued to fall on Tuesday after a sharp setback on Monday. The market is following the development of Russo-Ukrainian negotiations, the US attempts to increase supplies from Venezuela and the spread of the new coronavirus in China

Brent crude futures for May fell by $4.97 (4.65%) on the London Futures Exchange, to $101.93 per barrel. The previous day, Brent crude fell by $5.77 (5.1%) to $106.9 per barrel

The April futures price for West Texas Intermediate crude at the time was lower in electronic trading on the New York Mercantile Exchange (NYMEX) by $4.73 (4.59%), to $98.28 per barrel. During the previous session, the futures contract fell by $6.32 (5.8%) to $103.01 per barrel

Media reports that the United States is considering lifting some sanctions against Venezuela in order to increase oil supplies have also enhanced market optimism about increased supply

Analysts believe that US President Joe Biden’s administration is trying hard to strike a deal with Venezuela in view of the historic decline in diesel supply levels

The market also analyzes the consequences of the introduction of restrictions and the new closure of the coronavirus in China due to the Covid-19 outbreak in the country. The authorities have already made decisions to impose strict restrictions in the large city of Shenzhen in the southeast of the country

According to experts, new closures in China raised concerns about declining demand

More countries reduce their reliance on Russia’s energy supply

Japan’s Economy, Trade and Industry Minister Hagiuda Koichi told reporters on Tuesday that Japan is seeking to reduce its reliance on Russian energy supplies, including liquefied natural gas

“We seek to reduce our reliance on Russian energy carriers by providing alternative sources of supply from outside Russia, especially through LNG investments,” the minister said

He noted that Japan also intends to develop renewable energy sources and nuclear energy to align its policy with the requirements of the G7 joint statement on the gradual reduction of reliance on Russian energy

Earlier, the G7 announced its desire to further reduce its reliance on Russian energy sources with regard to the situation around Ukraine, taking into account the guarantees that will give the world time to ensure “alternative and sustainable supplies,” as the leaders stated in a joint statement

In 2021, Russia’s share of total Japanese LNG imports of 74.32 million tons was estimated at 9% and its share of total crude oil imports of 2.48 million barrels per day was estimated at 4%, according to the Japanese Ministry of Finance

 

The International Monetary Fund predicts an increase in Ukraine’s public debt

The International Monetary Fund (IMF) predicts an increase in the ratio of public and guaranteed debt from the public sector of Ukraine to GDP in 2022 from 50.2% to 60.3%

According to the fund, persistent geopolitical tensions or deviations in economic policy could threaten this path

“Basic forecasts suggest that external debt will fall below 50% of GDP by 2026, but this is subject to increased uncertainty and possibly higher external financing due to risks related to macroeconomic shocks,” the IMF said

For the hryvnia exchange rate, the Fund refused to make any specific estimates, but predicted a near-term decline in the exchange rate due to economic shocks, but then stabilized in the medium term as the recovery began

The International Monetary Fund (IMF) noted that the hryvnia depreciated from the beginning of the year until February 24, owing to mounting geopolitical tensions, when Russia launched a military operation in Ukraine, by about 7% to 29.5 hryvnia/$1

The foreign exchange market was suspended, and the National Bank set the rate at this level. The exchange rate is expected to remain stable for the duration of the conflict and some depreciation is expected as controls are gradually deregulated and the economy stabilized until the end of the year

With regard to inflation, the Fund notes that it is likely to remain at higher levels for a longer period than previously anticipated. “Single-digit levels are only likely in 2023, with a target of 5% in 2025 due to supply disruptions and spending pressure to meet conflict-induced needs,” the IMF said, and inflation is expected to rise this year to 20% from 10% in 2021 and 5% in 2020

Ukraine’s public debt was reported to have increased in 2020 (when the epidemic began) from 50.5% to 61% of GDP, but last year it fell to 50.2% of GDP

Effective 7 March, the International Monetary Fund estimated that Ukraine’s gross domestic product (GDP) would decline by 10% this year, but indicated that it would increase significantly if the conflict continued

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Gold falls to $1,955 an ounce

Gold prices decline by more than 1% on Monday as risk appetite improved with cautious hopes of progress in the peace talks between Ukraine and Russia

The price of spot gold fell by 1.4% to $1,955.43 an ounce and still maintaining a six-month high. US gold futures declined by 1.4%, trading at $1,957.80 an ounce at Comex

In the meantime, US benchmark 10-year Treasury yields rose slightly with the Federal Reserve expected to raise the interest rate this week, adding further pressure on non-yield alloys

Palladium declined sharply as concern about supply shortages faded. The precious metal used in catalytic converters fell by 11.8% to $2412.84 an ounce, having recently reached record levels

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