Thread: ForexMart's Forex News

January 26. The US will release another 13.4 million barrels of oil from strategic reserves

The US Department of Energy has announced plans to release an additional 13.4 million barrels of oil from the country's strategic reserves.

The release of reserves will be distributed among seven companies: Shell will buy 4.2 million barrels, Trafigura – 3 million, Phillips 66 Company – 2.3 million, Macquarie Commodities Trading – 2 million, Chevron – 0.885 million, ExxonMobil – 0.515 million and BP Products North America – 0.5 million barrels.

Recall that US President Joe Biden in November 2021 announced the release of 50 million barrels of oil from reserves due to high oil prices in the world and gasoline in the States themselves. The first deliveries were made in December, and the rest will be carried out gradually until April. The return of reserves to the strategic reserve is planned for 2022-2024.

Today, oil quotes are showing growth again. The current Brent quote is $88.00 per barrel. Raw materials are getting more expensive after the release of yesterday's report from the American Petroleum Institute (API), according to which stocks decreased by 872 thousand barrels after rising by 1.4 million barrels a week earlier.

Today, we should pay attention to similar statistics from the US Department of Energy. Experts expect that oil reserves in the country decreased by 2.1 million barrels last week, gasoline reserves increased by 2.2 million barrels, and distillate reserves decreased by 1.6 million barrels.

January 27. The US economy in 2021 showed the highest growth rate since Reagan

According to the Bureau of Economic Analysis of the US Department of Commerce, the country's gross domestic product increased by 5.7% for the whole of 2021 after falling by 3.4% in 2020. Such economic growth has become the most impressive in the last almost 40 years, since the presidency of Ronald Reagan.

In the last quarter of 2021, US GDP increased by 6.9% on an annualized basis, which exceeded analysts' expectations of 5.5% growth.

In 2020, the American economy shrank for the first time since 2009 (by 3.4%), and the reason for this was the global coronavirus pandemic. However, by the middle of 2021, the economy had recovered and returned to the pre-pandemic level.

Analysts note that high economic growth in the United States is accompanied by high inflation – it is also at multi-year highs. In particular, in 2021, inflation accelerated to 7%, which was the largest indicator since 1982.

In response, the US Federal Reserve announced that it was curtailing anti-crisis measures, and in March it could raise the base interest rate for the first time in four years. Representatives of the regulator note that a tougher monetary policy is able to restrain price growth significantly exceeding the target level of 2%.

February 1. Gold is rising on Tuesday morning on political tensions

The value of gold is steadily growing on the first day of February. The current quote of the precious metal is $1.803 per ounce. Analysts call the main reason for the growth of the asset the strengthening of foreign policy tensions in the international arena caused by the contradictions around Russia and Ukraine.

And since gold is a «safe haven asset», increased tension successfully supports demand for it, somewhat leveling the recent weakening from the $1.850 level due to the tightening of the monetary policy of the US Federal Reserve System. Traditionally, gold acts as a resource that investors prefer to acquire in the event of difficult and questionable situations.

The markets are also focused on the meetings of the European and British central banks on Thursday. If both regulators agree to increase interest rates, the demand for national currencies will grow, and for the precious metal will decrease.

Analysts also presented a report on the global demand for gold by the end of 2021. According to statistics, demand reached the level of 4,021 tons, which was facilitated by a 50% growth in the fourth quarter. In annual comparison, the indicator increased by 10%. It is noted that such indicators are caused by the recovery of the jewelry and technology sectors of the industry, as well as active purchases of gold from central banks.

January 31. Oil remains near highs at the beginning of a new trading week

On Monday, oil prices remained stable at $89 per barrel after jumping to seven-year highs last week.

The current Brent quote is $88.90, North American WTI oil is trading near $87.30 per barrel.

Both brands of oil rose in price for the sixth week in a row. Since the beginning of the year, their cost has risen by about 16%, while the growth rate at the end of the month may be the highest since February 2021.

The main support for commodity assets is provided by concern due to problems with oil supplies, coupled with continuing geopolitical risks. An additional growth factor was a sharp cold snap in the United States, which increases the demand for fuel.

This week, on February 2, an important event for the oil market will take place – a meeting of OPEC+ ministers. Market participants expect that the alliance countries will decide to continue to increase their total production by the planned 400 thousand barrels per day on a monthly basis.

February 2. OPEC+ countries will increase oil production in March by 400 thousand barrels per day

A meeting of OPEC+ ministers was held today, at which it was decided to jointly increase oil production in March 2022 by 400 thousand barrels per day. Russia's quota in the March increase remains the same – 109 thousand barrels per day.

The alliance's ministerial meeting was a record short one and the decision to maintain the terms of the deal was made in half an hour. The next OPEC+ meeting, where the alliance's policy for April will be discussed, will be held on March 2.

After the announcement of the results, the price of Brent oil jumped to around $90.50 per barrel, declining some time later to $89.30. WTI crude oil is trading near $88.10 per barrel. Since the beginning of the year, oil quotes have increased by more than 17%.

The OPEC+ decision not to increase the production recovery rate above the planned rate may contribute to a further rise in the price of hydrocarbons

February 3. The Bank of England may raise the key rate for the second time in a row

A regular meeting of the Bank of England will be held today, at which, as expected, the regulator may raise the key rate for the second time in a row – from the current 0.25% to 0.5%, against the background of record inflation in the UK for 30 years. The last time the British Central Bank raised rates at two meetings in a row was in 2004.

It is worth noting that consumer prices in the UK in December 2021 jumped by 5.4% compared to the same month of the previous year, showing record growth rates since March 1992.

The British regulator raised the rate in December last year to 0.25%. At the same time, the Bank of England became the first among the world's central banks to take such a step, noting that some moderate tightening of monetary policy will be necessary to achieve the 2% inflation target.

In addition, in December, the Central Bank decided to leave unchanged the volume of the asset repurchase program at the level of 895 billion pounds, including the repurchase of government bonds in the amount of 875 billion pounds. However, it is possible that today the Bank of England will stop all reinvestments in the framework of asset purchases.

According to experts, the main message of the British regulator will be that a moderate tightening of monetary policy is necessary to maintain the stability of the economy. They also expect that inflation may peak at 6.5% and will slow down for a longer time than previously expected, remaining above the 2% target for two years.

February 7. Oil market declines after reaching multi-year highs

Brent oil started today with an increase to the level of $93.99 per barrel, continuing to update multi-year highs. The last time the price of oil reached the area of $94 in 2014. The price of North American WTI oil is located near $92.70.

Analysts note that the main support for quotes is provided by expectations of maintaining a limited supply against the backdrop of recovering demand.

An additional growth factor is the continuing concern due to geopolitical risks, as well as doubts about OPEC's ability to supply in sufficient volume and the cooling in the United States. Experts believe that the deterioration of the geopolitical situation in Eastern Europe may lead to an increase in the price of oil to the region of $ 120 per barrel.

However, following the highs, a technical correction is possible. That's what we see on the charts of the movement of oil quotes today. After the morning growth to the level of $94 per barrel, prices fell to $91.20. However, the reason may lie not only in the correction. Today it became known that negotiations between the United States and Iran on the resumption of the nuclear deal are probably close to completion, which will lead to an increase in the level of oil supply.

February 8. Gold is getting cheaper on the expectation of a faster Fed rate hike

On Tuesday, the price of gold was declining as the US dollar rose in anticipation of inflation statistics. Investors predict that the Federal Reserve will signal an aggressive tightening of monetary policy and multiple interest rate hikes this year.

The spot price of precious metals in the morning declined to $1816 per ounce, recovering during the day to $1820.

Inflation data in the United States will be published on Thursday. The consumer price index for January is expected to show an annual growth of 7.3%, which would be the highest jump since 1982. And as experts note, high inflation may force the Fed to tighten policy faster, which will lead to an increase in the opportunity costs of owning non-profitable gold.

Additional support for gold is provided by the ongoing tensions around Russia and Ukraine, as the precious metal is used as a safe haven asset.

As for the other metals, palladium fell today to $2200, silver declined to $22,777, and platinum fell to $1004.25 per troy ounce.

February 10. Oil reserves in the United States unexpectedly fell, production increased

According to the weekly report of the Energy Information Administration of the US Department of Energy, commercial oil reserves for the week ended February 4 unexpectedly decreased by 4.8 million barrels to 410.4 million barrels. Analysts, on the contrary, expected an increase of 400 thousand barrels.

At the same time, the strategic reserve of oil in the country decreased by 1.4 million barrels to 587.5 million barrels. And oil reserves at the country's largest terminal in Cushing decreased during the reporting period: from 30.5 million barrels to 27.7 million.

In addition, the report indicated a decrease in gasoline inventories by 1.6 million barrels to 248.4 million. Analysts had expected an increase of 1.6 million barrels. Distillate stocks decreased by 0.9 million barrels to 121.8 million barrels. A decrease of 1.7 million barrels was predicted.

Oil production

The Ministry also shared statistics on oil production in the United States. Its indicators increased by 100 thousand barrels per day to the level of the previous week – up to 11.6 million barrels.

On average, over the past four weeks, production in the United States amounted to 11.6 million barrels per day.

It is worth noting that on February 8, the Ministry of Energy raised the forecast of average oil production in the country by the end of this year to 11.97 million, and next year to 12.6 million barrels per day.

February 9. ECB on the verge of tightening monetary policy

German Central Bank Governor Joachim Nagel suggested that the European Central Bank could raise interest rates this year, as inflation is likely to remain high for longer than expected.

Nagel, who headed the Bundesbank in January, also said that if the inflation picture does not change by March, Germany will advocate the normalization of monetary policy. And the first step to this is to stop net bond purchases during 2022.

The head of the European regulator itself, Christine Lagarde, also said last week that inflation in the eurozone will remain at an elevated level for longer than the ECB expected. Moreover, Lagarde said that the regulator can no longer rule out the scenario of a rate hike in 2022. Such a «hawkish» bias, following December comments that the ECB is unlikely to raise rates in the new year, had an immediate impact on European debt yields.

At the same time, Lagarde tried to reassure investors, assuring that any changes in the ECB's policy would be gradual.

Experts believe that the first ECB rate hike is likely to occur in the fourth quarter of the year, and the next round will take place in early 2023. Inflation in the eurozone is expected to be around 4% throughout the year. The current inflation rate is 5.1%.

February 11. The US stock market fell on inflation data

US stock indexes fell sharply after the publication of statistics on inflation in the United States.

According to the Ministry of Labor, consumer prices (CPI) jumped 7.5% in January compared to the same month in 2021, which was a record inflation rate since 1982. In December last year, the growth rate of consumer prices accelerated by 7%.

After the release of the data, the yields of American government securities jumped sharply. The interest rate of ten-year US Treasuries has risen above the 2% mark for the first time since 2019.

The stock market did not stand aside either: indicators of all 11 S&P 500 industry groups ended trading in the red on Thursday, the subindex of technology companies most sensitive to interest rate hikes fell by 2.1%. The value of Qualcomm Inc. shares decreased by 5.3%, Advanced Micro Devices Inc. – by 5.3%, Adobe Inc. – by 5.1%, Apple Inc. – by 2.3%.

The Dow Jones Industrial Average index fell by 526.47 points (1.47%) to 35241.59 points by the close of the market on Thursday.
The Standard & Poor's 500 declined by 83.1 points (1.81%) to 4504.08 points.
The Nasdaq Composite lost 304.73 points (2.1%) to 14,185.64 points.

Analysts expect that high volatility in the stock market will continue until the March Fed meeting, at which the key rate is likely to be increased.

February 14. Gold has risen to a maximum of three months due to geopolitics

Gold prices jumped on Monday amid increased demand for protective assets due to high geopolitical tensions on the border of Russia and Ukraine.

In particular, the precious metal quotes reached the level of $1.864.85 per ounce, which became a three-month high.

Over the weekend, it became known that the adviser to the American president on national security, Jake Sullivan, said that Russia has the opportunity to attack Ukraine without waiting for the end of the Olympics in Beijing. After that, a telephone conversation took place between the Presidents of the United States and Russia Joe Biden and Vladimir Putin, but he could not ease the tension.

The American president ruled out the possibility of sending American soldiers to Ukraine, but threatened Moscow with large-scale sanctions in the event of an invasion. At the same time, Russia continues to deny its intention to attack Ukraine.

Despite the departure of investors in the assets of the «safe haven», the growth of gold is restrained by the strengthening of the dollar. The dollar is also considered a reliable asset, plus it receives support due to expectations of an imminent increase in the base interest rate of the US Federal Reserve System.