Oil stays above $120 per barrel ahead of NATO Russia-Ukraine summit

LONDON - World share markets were choppy on Thursday as the Russia-Ukraine war kept oil above $120 a barrel, while "stagflation" worries rose on renewed talk of aggressive US interest rates hikes and slowing growth.

Europe's main stock indexes barely budged and government bond yields edged up toward multi-year highs hit earlier in the week as March PMI data came in reassuringly robust. 

Focus was otherwise on a Thursday special NATO summit in Brussels, which US President Joe Biden will attend, to discuss further responses to Russia's month-old invasion of Ukraine, which Moscow calls a "special military operation". 

Rabobank's head of macro strategy, Elwin de Groot, said markets would be watching what emerges closely, especially how unified NATO members remain and what Biden can offer European countries to help wean themselves off Russian gas.

"The NATO meeting is certainly important," de Groot said. "At the minimum you would expect the members to come up with preparations for a possible further escalation in the Ukraine war."

Wall Street futures were up a solid 0.6 percent ahead of trading there, but the mood seemed changeable.

MSCI's broadest index of Asia-Pacific shares outside Japan recouped some of its early losses overnight but ended down 0.6 percent after more falls in China and Hong Kong.

Japan's Nikkei bucked the trend, rising 0.25 percent to a nine-week high as its exporters cheered the yen falling to its lowest against the dollar since 2015. 

At 1000 GMT, the dollar was up 0.4 percent versus the yen, at 121.65, with expectations that the Bank of Japan will be far behind other top central banks in raising interest rates.

HAWKISH

Driving some of the volatility, Federal Reserve policymakers on Wednesday signaled they stood ready to take more aggressive action to bring down decades-high inflation, including a possible half-percentage-point rate hike at the next policy meeting in May. 

Those signals pushed all three main US share benchmarks 1 percent lower overnight. 

"The sharp hawkish repricing of Fed rate hike expectations has mainly benefited the US dollar against low yielding currencies whose own domestic central banks are expected to lag well behind the Fed in tightening policy," MUFG currency analyst Lee Hardman wrote in a note to clients.

Oil and gas markets also remained hot amid the geopolitical uncertainty.

Russian President Vladimir Putin said on Wednesday that Moscow would seek payment in roubles for gas sold to "unfriendly" countries, jolting energy markets, although Italy's President Mario Draghi said it planned to keep paying in euros. 

Brent futures were little changed at $121.67 a barrel and US West Texas Intermediate futures fell 41 cents, or 0.35 percent, to $114.5 a barrel

The bond market was starting to shift again with the yield on benchmark 10-year Treasury notes up at 2.37 percent and German bunds creeping over 0.52 percent.

"Inflation is really the big driver," Rabobank's de Groot said, adding that it was also behind falling consumer confidence.

EU leaders are expected to agree at a two-day summit starting on Thursday to jointly buy gas, as they seek to cut reliance on Russian fuels and build a buffer against supply shocks. But the bloc remains unlikely to sanction Russian oil and gas. 

Gold was slightly lower at $1,942.9 per ounce.

(Reporting by Marc Jones; Editing by William Mallard)

-reuters-

Oil price spikes to $139 on talks about Russia oil ban, Iran deal delay

LONDON - Oil prices spiked to their highest levels since 2008 on Monday amid market supply fears as the United States and European allies considered banning Russian oil imports and prospects for a swift return of Iranian crude to global markets receded.

In the first few minutes of trade Brent crude reached $139.13 a barrel and US West Texas Intermediate (WTI) hit $130.50, both benchmarks striking their highest since July 2008.

By 1204 GMT, prices had eased back, with Brent up 6.3 percent at $125.55 per and WTI up 6.7 percent at $123.37.

Global oil prices have spiked more than 60 percent since the start of 2022, along with other commodities, raising concerns about world economic growth and stagflation. China, the world's No. 2 economy, is already targeting slower growth of 5.5 percent this year. 

US Secretary of State Antony Blinken said on Sunday said the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with Congressional committees to move forward with a US ban. 

"We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period," UBS commodity analyst Giovanni Staunovo said.

A prolonged war could see Brent moving above the $150 per barrel mark, he said.

Analysts at Bank of America said if most of Russia's oil exports were cut off, there could be a 5 million barrel per day (bpd) or larger shortfall, pushing prices as high as $200.

JP Morgan analysts said oil could soar to $185 this year, and analysts at Mitsubishi UFJ Financial Group Inc (MUFG) said oil may rise to $180 and cause a global recession.

Russia is the world's top exporter of crude and oil products combined, with exports at around 7 million bpd, or 7 percent of global supply. Some volumes of Kazakhstan's oil exports from Russian ports have also faced complications.

The head of Japan's largest business lobby said the country's imports of Russian crude could not be replaced immediately. Russia is Japan's fifth-biggest supplier of crude oil and liquefied natural gas (LNG).

Meanwhile, talks to revive Iran's 2015 nuclear deal with world powers were mired in uncertainty after Russia demanded a US guarantee that sanctions it faces over the Ukraine conflict would not hurt its trade with Tehran. China also raised new demands, sources said. 

France told Russia on Monday not to resort to blackmail over efforts to revive the nuclear deal, while Iran's top security official said the outlook for the talks "remains unclear". 

"Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long," said Amrita Sen, co-founder of Energy Aspects, a think tank.

Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said. 

Separately, US and Venezuelan officials discussed the possibility of easing oil sanctions on Venezuela but made scant progress toward a deal in their first high-level bilateral talks in years, five sources familiar with the matter said, as Washington seeks to separate Russia from one of its key allies. 

(Reporting by Bozorgmehr Sharafedin in London and and Scott DiSavino in New York, additional reporting by Florence Tan in Singapore; Editing by Jason Neely and Edmund Blair)

-reuters

Oil, wheat and aluminum jump as sanctions on Russia bite

LONDON - Brent crude jumped to near eight-year highs, wheat to 14-year peaks and aluminum hit a record as the Russian attack on Ukraine intensified and Western sanctions disrupted air and sea transport of commodities exported by Russia.

Russian forces were attempting to subdue Ukrainian cities, seven days into an invasion that has sparked massive sanctions, pushing international companies to halt sales, cut ties and dump billions of dollars' worth of investments. 

Brent climbed above $113 a barrel to its highest since June 2014, a gain of more than 40 percent so far this year. 

"Oil has been pushing higher on growing perceptions that Russian oil is unable to be "transacted"," ED&F Man Capital Markets analyst Edward Meir.

"Although oil is not technically under sanction, traders are understandably nervous about taking delivery of Russian crude, let alone storing, shipping and ultimately selling it."

Russia accounts for about 10 percent of global oil supplies. Russia and Ukraine account for about 29 percent of wheat exports. Wheat prices hit $10.59 a bushel, the highest since March 2008.

Corn prices rose to $7.47-3/4 a bushel, the highest since Dec. 2012. 

"Global buyers of grains have been increasingly turning to the US, Europe or South America to secure supplies in the immediate term, given the ongoing conflict," ING said in a note.

"Moreover, demand for stockpiling has also increased due to current uncertainty."

Dutch gas prices hit an all-time high of 185 euros a MWh after the UK ordered its ports to deny entry to Russian-owned ships and European Union countries considered a similar ban after a halt on air traffic. 

Russia supplies the European Union with 40 percent of its gas needs. It accounts for 40 percent of global mined palladium output, 10 percent of nickel supplies and 6 percent of global aluminum production. 

Palladium prices around $2,610 an ounce were trading near the seven month peak hit on Tuesday, aluminum hit a record high at $3,552 a tonne and nickel at $25,530 a tonne, close to the 11-year high hit last week.

"Supply outages from Russia are now but a question of time," Commerzbank analysts said in a note.

"Depending on how long they last, they could cause turmoil – in which case prices would rise significantly further."

Malaysian palm oil futures rose past 7,000 ringgit a tonne to hit a record high, on the prospect of rising demand as the closure of Ukrainian ports hits supplies of sunoil from the Black Sea region. 

Newcastle coal futures jumped to records above $300 a tonne as buyers scrambled to find alternatives to supplies from Russia, the third largest exporter after Indonesia and Australia.

(Reporting by Pratima Desai; additional reporting by Nigel Hunt, Susanna Twidale and Gavin Maguire; editing by Jon Boyle)

-reuters

Oil prices recover on Middle East supply concern

Singapore - Oil prices recovered from multi-month lows in Asian trade Monday as analysts said concerns over Middle East supply were resurfacing.

Oil was also supported by Group of Eight (G8) leaders calling for Greece to stay in the eurozone at a weekend summit in the United States as they debated deep divisions about how best to tackle Europe's fiscal woes.

New York's main contract, West Texas Intermediate crude for delivery in June was up 37 cents to $91.85 per barrel while Brent North Sea crude for July gained 77 cents to $107.91 in the afternoon.

"The Middle East concerns are coming back into the market, and the upcoming talks between Iran and Western countries is being seen as a crunch point for oil," said Justin Harper, market strategist at IG Markets Singapore.

"The G8's commitment to growth and to keep Greece in the eurozone has also spurred the market," he added.

G8 leaders on Saturday sent a strong message to major producer Iran that tough sanctions imposed over its nuclear programme would be firmly applied, days before the next round of nuclear talks between global powers and Tehran in Baghdad.

Iran faces a raft of sanctions from the United Nations, the United States and the European Union over suspicions that the Islamic republic's nuclear program masks a push to develop atomic weapons.

Tehran has so far denied the charges, and threatened to blockade the strategic strait of Hormuz if it is faced with further measures.

Meanwhile, market fears over the eurozone's debt troubles were slightly soothed by a broad agreement by the G8 leaders for the bloc to embrace growth measures along with austerity as a way to stave off a major debt contagion.

"The G8 talk of helping global economic growth has helped steady the ship a little in these choppy waters," said Harper.

DBS Bank said however that the G8 statement was "long on promises and short on details" and that attention had now shifted to an EU informal summit on Wednesday.

The G8 club of developed nations is made up of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States. — AFP

source: gmanetwork.com