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Trends & Analysis
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Crude Surges Past $100 Again On More Russia Sanctions

The news shaping the markets today

Russia has withdrawn around two-third of its troops near the Kyiv region, according to US officials. The news drove the US dollar index slightly lower this morning.


The Philippines reported another acceleration in its annual inflation rate to 4.0% in March, from 3.0% in the previous month. Although inflation reached its highest level since October 2021, the PHP/USD forex pair remained elevated.


Singapore’s S&P Global PMI rose to 52.9 in March, from February’s reading of 52.5, signalling expansion for the 16th straight month. However, the SGD/USD pair remained broadly flat in forex trading this morning.


Japan’s composite PMI rose to 50.3 in March, from a flash reading of 49.3 and a final reading of 45.8 in the previous month, lending support to the JPY/USD forex pair.


Australia’s AiG construction PMI rose to 56.5 in March, from 53.4 in the previous month. However, the AUD/USD pair declined slightly in forex trading this morning.

 

What’s happening: Crude oil futures recorded sharp gains on Monday, after biggest weekly decline.

What happened: Last week oil prices had notched their biggest weekly decline in the past two years.

However, WTI prices surged back above the $100 level on Monday, after leaders of one of the major regions announced additional sanctions against Russia.

Why it matters:

Surging covid-19 cases in China had raised concerns of a decline in energy demand, with lockdowns imposed last month in the country’s financial capital, Shanghai. The news had exerted pressure on oil prices.

However, some serious images emerged from Ukraine even as Russia announced plans to pullback its troops from their positions near Kyiv. Around 410 bodies of civilians were found in towns near Ukraine’s capital city.

As a result, EU officials said they were looking to impose further sanctions against Russia. Meanwhile, state oil producer Saudi Aramco raised the price of its May Arab Light crude to Asia by $4.4 a barrel to a record high of $9.35.

Markets also monitored the announcement of a two-month truce between a Saudi-led coalition and the Houthi group.

WTI crude for May delivery gained $4.01, or 4%, to close at $103.28 per barrel on the NYMEX, after closing at $99.27 on Friday, which was the lowest since March 16.

Prices of the US benchmark had dipped around 13% last week, representing the biggest weekly percentage decline since late April 2020 after President Joe Biden announced plans to release up to 1 million barrels of oil per day from its SPR (Strategic Petroleum Reserve).

June Brent crude gained $3.14, or 3%, to close at $107.53 per barrel, after dipping more than 11% last week.

In other energy trading, May gasoline gained 1.4% to $3.198 a gallon, while May natural gas closed lower by 0.1% at $5.712 per million British thermal units on Monday.

What to watch: Investors will keep an eye on talks of additional sanctions on Russia. Rising covid-19 cases in some parts of the world will also remain in focus.

The API’s (American Petroleum Institute) data on crude oil stockpiles will be released today. Us crude inventories had declined by 3 million barrels in the week ended March 25, following a 4.28 million barrels decline a week ago.

The markets today

US stocks will be in focus today ahead of a basket of economic reports from the country

 

Context: Markets in the US closed higher on Monday, backed by a surge in technology stocks.

Details: Investors bought tech stocks on Monday, which were considered undervalued, after their decline through the first quarter of the new year.

Shares of Twitter jumped over 27% on Monday, following news of Tesla CEO Elon Musk buying a 9.2% passive stake in the social media stock. Tesla also surged close to 6%. Other tech majors, including, Apple, Alphabet and Amazon, gained more than 2% each on Monday.

Shares of Starbucks Corporation bucked the trend and declined around 4%, after the company suspended its share repurchase program.

The Dow Jones climbed 103.61 points, or 0.3%, to settle at 34,921.88, while the S&P 500 rose 0.81% to 4,582.64 on Monday, with both indices recording gains for the second straight session.

The tech-laded Nasdaq 100 was the big outperformer, gaining 2.01% to settle at 15,159.58 on Monday. The Nasdaq is now down only around 10% from its record high.

What to watch: Investors will keep an eye on rising covid-19 cases in China, Europe and other regions, and the ongoing Russia-Ukraine crisis.

Traders also await the release of US economic data on balance of trade and services PMI. The US trade deficit, which widened to a record high of $89.7 billion in January, is expected to ease to $88.5 billion in February. The S&P Global US services PMI is expected to improve to 58.9 in March, from 56.5 in the previous month, while the ISM Services PMI is projected to rise to 58.4, from 56.5 in February.

Other Markets: European trading indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.28%, 0.50%, 0.70% and 0.84%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY – 122.48 and 122.65 Positive
GBP/USD – 1.3116 and 1.3119 Positive
WTI Crude Oil – 104.66 and 105.16 Negative
Natural Gas – 5.804 and 5.829 Negative
FTSE 100 – 7559.60 and 7574.82 Positive

 

Market snapshot

What else to watch today

Russia’s composite PMI, services PMI and GDP, France’s industrial production, South Africa’s IHS Markit PMI, Spain’s services PMI and composite PMI, Italy’s services PMI and composite PMI, France’s services PMI and composite PMI, Germany’s services PMI, composite PMI and new passenger car registrations, Eurozone’s services PMI and composite PMI, UK’s new car registrations, services PMI and composite PMI, Canada’s balance of trade, exports and imports, US exports, imports, Redbook index, composite PMI and total vehicle sales, Logistics Manager’s Index, as well as Brazil’s services PMI and composite PMI.

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