Oil jumps to $110 and gold is declining

2022-03-02T18:04:36
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Oil jumps to $110 and gold is declining: The Russo-Ukrainian War supports commodity markets in general, and oil in particular,
with crude reaching the highest levels in almost 9 years, after the shock it suffered in the last two years due to the Coronavirus, Covid-19. 

Evest follows developments in the commodity markets in the following report.

Topics

Oil exceeds 110 dollars

Two Big Oil Sessions

sanctions against Russia

Gold declines as the dollar rise

 

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Oil exceeds 110 dollars

Benchmark Brent and West Texas Intermediate oil prices, driven by news of sanctions against Russia, traded dramatically on Wednesday morning.

The cost of Brent crude futures for May on the London Stock Exchange ICE Futures,
rose by $110.52 per barrel, 5.29% higher than the closing price of the previous session.

West Texas Intermediate crude futures’ prices for April in electronic trading on the New York Mercantile Exchange (NYMEX) rose by 5.44% to $109.04.

The price of oil is rising in the face of strict US, UK and EU measures against Russia.

A group of US senators drafted a bill to embargo US imports of Russian oil and submitted it to Congress,
according to Republican Roger Marshall’s press service, the document’s initiator.

Two Big Oil Sessions

New York-traded West Texas Intermediate crude futures which jumped by more than 5% to $109.23 per barrel,
also rose to a record since September 2013.

In yesterday’s session, West Texas Intermediate crude rose by 8.03%, ending the session at $103.41 per barrel.

Brent crude rose by 5.6 percent to $110.84 in the last few hours, the highest since July 2014,
after closing the evening session up 7.15 percent to $104.97.

The panic over the shortage of oil and gas supplies on the market is mounting:

After the sanctions, there was already growing concern that Vladimir Putin would decide to stop Russia’s energy supply.

Oil prices rose by 11% this Thursday, the value of natural gas rose by 25%,
and the market was concerned that pressure from the invasion of Ukraine caused prices of these raw materials to rise,
which would end up affecting all sectors.

In addition, fuel prices have risen to more than 10% since the military attacks on Ukraine began early Thursday morning.

The benchmark Brent from the North Sea is being sold at $107.57 per barrel, up 6.52% over the day and more than 11.16% since last Thursday. 

In the meantime, West Texas Intermediate (WTI) has gained 15.81% since the start of the Russian invasion and is selling at $106.78 a barrel.

Only on Tuesday, its price rose to 11.55%.

In the meantime, the Mexican export mix was sold at $97.57 per barrel, up 6.29% on the day and at 10.21% after the conflict began.

Natural gas at ICE in London today ended up at £2.99 per million British thermal units, an increase of 25.96% in a session,

and an increase of 40.39% since last Thursday

In addition, Brent crude peaked since July 2014 and West Texas Intermediate peaked since June of that year.

In addition to crude, US distillate and gasoline futures hit their highest levels since 2014.

Sanctions against Russia

The focus of sanctions against Russia is not only on the energy sector, but traders are moving away from trading Russian crude,
resulting in significant reductions in oil and reduced supplies of other types of crude.

Russia exports 4 to 5 million barrels per day of crude oil and 2 to 3 million barrels per day of refined products.

Russian oil buyers have difficulties with payments and ship availability as a result of the sanctions,
and BP has canceled shipments of fuel oil from a Russian Black Seaport.

About 10% of Russian crude exports were affected, according to the first ESAI estimates.

But Russia’s large presence in the global market makes it difficult to completely exclude it.

The statement by Maersk, the world’s largest shipping company,
on Tuesday that it would stop container shipments to and from Russia further exacerbated Russia’s economic isolation. 

 

Gold declines as the dollar rise

Gold prices declined in early Asian dealings on Wednesday, as the dollar rose,
surpassing the demand for safe-haven boosted by the escalating Russian – Ukrainian conflict.

The spot gold price fell by 0.4% to 1935.38 dollars an ounce. US gold futures declined by 0.4 percent to $1936.50.

The metal rose about 6.5% in February, hitting an 18-month high of $1,973.96 last week.

The dollar index stabilized near a 20-month high on Tuesday, making gold less attractive to holders of other currencies.

Besieged Ukrainian cities are preparing for further attacks on Wednesday,
as Russian leaders intensify their bombing of urban areas in an attempt to reach the capital Kyiv with their fierce Ukrainian resistance.

Russian and Ukrainian negotiators met on a ceasefire on Monday, but the talks failed miserably and further rounds have yet to be announced.

The strong and consistent reaction of American companies that have taken a stand as missiles hit Ukraine’s major cities has increased.

Gold is a safe store of value in these times of uncertainty and also a hedge against high inflation.

Investors are awaiting Fed Chairman Jerome Powell’s testimony before the US Congress

on Wednesday and Thursday for more clarity on raising interest rates amid tensions in Ukraine and rising inflation

Holdings of the world’s largest gold-backed trading fund, the SPDR Gold Trust, rose 1.3% to 1,042.38 tons on Tuesday – its highest level since July 2021.

Car-catalyzed metal palladium rose 1.2 percent to $ 2612.18 after hitting a seven-month high of $2,722.79 on Tuesday.

Russia is the largest producer of palladium, with Moscow-based Nornickel acquiring 40% of the world’s mineral mining production last year.

Spot silver fell by 0.9 percent to $25.15 an ounce, while platinum rose by 0.1 percent to $1,053.79.

 

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