Overview of commodity market for week-Budrigantrade review

Budrigantrade.com - Two presidents are making extremely risky bets: Vladimir Putin believes Europe should pay for Russia's gas in rubles while Joe Biden desires to give an adequate number of barrels of oil at home to prevent rough and gas costs from going higher.

It will be interesting to see how far they advance.

In the case of Putin, his threat of "pay-in-rubles-or-no-gas" comes after the peak winter heating demand has passed, which raises questions about how desperate European buyers might be to comply with his demand.

With spring comes progress and summer soon to come, Moscow might be feeling a little bit hot under the collar in this situation.

The Kremlin makes a lot of money in foreign exchange selling gas.

The most recent information from Gazprom, the Russian gas producer, for the first nine months of 2021 (MCX: Between January and September, 176 billion cubic meters of gas were exported, resulting in a total of 2.5 trillion rubles (31 billion dollars) in revenue from sales to Europe, Turkey, and China.

The standoff could drag on until meaningful cold returns in late autumn for Europe to feel distressed enough to consider a deal or compromise with Moscow in the event that the European Union refuses to cooperate with Putin—there have already been enough protests to demonstrate that they won't. That could be in November. And if Putin sticks his neck out, gas sales to Europe could stop for seven months until then.

Russia might be forced to pump its gas into domestic storage facilities that can hold about 72 billion cubic meters during that time. Europe-based Gazprom storage facilities could accommodate an additional 9 billion cubic meters.

By 2026, Gazprom anticipates that domestic gas demand will rise to 260 bcm, up from 238 bcm in 2020. The company also intends to increase storage.

According to analysts, rerouting European gas to existing storage would have a negative impact on long-term growth because some gas production could be halted as a result.

"For Russia, a choice to confine supply would resemble messing itself up," experts at SEB Exploration said.

Moreover, according to Reuters, the EU has regulations for both preventing and responding to gas supply disruptions.

The regulation defines three crisis levels: an alert, an early warning, and an emergency. At each of the three levels of a crisis, EU nations are required to have plans in place for how they would deal with the effects of a supply disruption.

If market-based measures are insufficient to ensure supplies to households and customers of essential service providers, European governments cannot intervene in an emergency. At each crisis level, each nation's plan should outline who is responsible for what, what steps are taken to make gas available in an emergency, and how countries will work together.

The EU guideline requires part states to help another EU country their gas framework interfaces with on the off chance that that nation demands help since it can't supply an adequate number of gas to its families and fundamental social administrations.

Several European nations have stated that, in addition to attempting to increase their share of the already constrained global gas market, they will also have to use more coal, possibly extend the lifespan of nuclear power plants, and boost the output of renewable energy sources.

Some, in any case, question that the gas-value stalemate will keep going for quite a long time as European organizations and families can sick bear to let costs for the item go any higher. The EU's gas spot market is already up 500 percent from a year ago. Last year, Russia supplied Europe with 155 billion cubic meters of gas, or a third of the continent's supply.

U.S. LNG exporters have previously arisen as large champs of Europe's stockpile emergency, while Norway has likewise benefited. The United States stated last week that it would work to supply 15 billion cubic meters of LNG to the European Union this year; however, this would not completely replace the LNG that Russia sends to Europe via pipelines.

According to Kateryna Filippenko, principal analyst at Wood Mackenzie, Europe may have enough gas in storage for the spring and summer without demand curtailing, but without energy conservation measures, Europe runs the risk of entering the winter with only about 10% of gas stored by the end of October.

European wholesale gas prices must remain higher than the Asian benchmark LNG price in order to attract additional LNG from other sources. Governments have spent billions of euros on measures to protect consumers and businesses from rising gas prices, which are already hurting.

"We must be aware that businesses with long-term contracts with Gazprom receive gas at significantly lower prices than we do on the LNG market. Therefore, our energy prices will be affected," EU lawmakers were informed by EU energy commissioner Kadri Simson last month.

In conclusion, the ruble, which was in drop in the initial fourteen days of the Ukraine intrusion, has found a story, not really in view of dealers' positive thinking in the Russian economy however more because of unprecedented endeavors by Moscow's national bank to set it back up. This was accomplished by restricting the amount of money that Russians can withdraw from their bank accounts, preventing Russian brokerage firms from letting foreign clients sell securities, and preventing commercial banks from selling dollars to customers.

Moscow is also making a steady profit from oil and gas exports, in addition to the efforts of its central bank. One justification for that, obviously, is that the actual approvals weren't intended to hurt Russia's energy deals, considering how Europe is reliant upon these. People who aren't taking Russian oil and gas right now are doing so out of self-interest, either out of support for Ukraine or out of concern for political repercussions. One notable exception to this is India.

The EU and the United States are aware that the only way to deprive Russia of the funds it needs to fund its war on Ukraine is to modify their current sanctions against Moscow and devise new ones that are more effective. On a fundamental level, the White House and its partners need to keep Russia from buying the tactical gear it requirements to proceed with the conflict, Delegate U.S. Depository Secretary Wally Adeyemo said.

Interestingly, Biden has gained support from rival Republican lawmakers in his home country to increase the sanctions against Russia. But the president is hesitant to accept that support because he wonders if it is a ploy by his rivals to push him further into a political rut ahead of the midterm elections in November.

On the oil front, Vice President Biden made an announcement on Thursday that his administration will relieve a global supply shortage by releasing a record amount of oil from the U.S. Strategic Petroleum Reserve every day for the next six months. The president's most serious issue here could in any case be OPEC, or the Association of the Petrol Sending out Nations, and its partners, who, when consolidated, are known as OPEC+.

The OPEC+, which is led by Russia and is controlled by Saudi Arabia, has no intention of allowing the oil market to be adequately supplied to the point where every required barrel becomes available. This is a possible scenario, and it could lead to the price of crude dropping from $100 to $50 per barrel. I say hypothetical because, even if it wanted to, OPEC+ would not be able to fill the market with the three million barrels per day that the West's sanctions on Russia have left behind.

As the United States maintains its ban on Russian oil and many other nations avoid doing business with Russia as a result of sanctions imposed against Moscow due to its so-called military operation in Ukraine, analysts in the energy sector anticipate an intensifying supply crunch in the coming months.

In spite of these warnings, OPEC+ decided on Thursday to only increase production by 432,000 barrels per day from May on. That represents a slight increase from its usual monthly increase of 400,000 barrels per day in a market that, according to analysts, required approximately 5 million barrels more.

In an apparent reference to the conflict in Ukraine, OPEC+ also stated on Thursday that the recent volatility in oil prices was "not caused by fundamentals, but by ongoing geopolitical developments." In the wake of Russia's sanctions, Brent reached 14-year highs of almost $140 per barrel and has largely remained above $100 for the past month.

According to Amos Hochstein, the Biden administration's special envoy for international energy affairs, the 180 million barrel release from the SPR is only the beginning of additional supply that will be brought aboard.

However, analysts of the energy market appeared to doubt the plan's success.

According to Ed Moya, an analyst at the online trading platform OANDA, "the knee-jerk selloff from the SPR announcement of the release of one million barrels a day from the SPR over the next six months won't have a lasting impact on oil prices." As a result, "if geopolitical risks continue to intensify, oil will recover most of this week's losses."

Biden requested the arrival of 50 million barrels from the SPR in November and 30 million in Spring, in a joint effort with the stores arrival of different nations like China, Japan, India, South Korea and England.

The U.S. Energy Information Administration reports that as of the week that ended March 25, the SPR had 568.3 million barrels in stock. The reserve could be reduced to a third of its current size if 180 million barrels are used up in six months.

In order to provide U.S. refiners with oil loaned from the reserve that they would not have to pay for but would return with a slight premium and within a specified period, Biden began tapping the SPR last year. The administration hoped that by doing this, there would be fewer transactions of oil on the open market and lower prices for fuel products like gasoline and diesel as well as crude.

Lately, the organization has let a few 3.0 million barrels week by week out of the SPR. However, refiners have produced more products than usual at this time of year, so the government's efforts haven't changed prices much yet. As a result, there has been a tremendously high turnover of barrels, which has kept prices for both oil products and crude unchanged.

In conclusion, two of the world's most powerful men are determined to sway the market in their favor due to their position and vast resources. Their actions will be documented in history as successful.

Oil: Weekly Settlements & WTI Technical Outlook After hitting a session low of $102.37, London-traded Brent, the global oil benchmark, fell 36 cents, or 0.3 percent, to $104.35 per barrel. Brent was down 13% so far this week, its biggest weekly decline since April 2020. Brent finished the first quarter up 39% just on Thursday.

New York-exchanged U.S. rough benchmark West Texas Middle of the road, or WTI, settled beneath key $100-per-barrel support. After hitting an intraday low of $97.81, WTI lost $0.90, or 0.9 percent, to close at $99.38. WTI was likewise down practically 13% on the week for its greatest week by week drop since April 2020. It finished the first quarter of trading up 33% on Thursday.

According to Sunil Kumar Dixit, chief technical strategist at skcharting.com, despite the fact that WTI's primary trend remains bullish, the benchmark for U.S. crude has lost some of its shine as a result of its bearish weekly close.

Dixit stated, "We see WTI support at $96.45 and resistance at $108.45 for the week ahead." Buyers with targets of $104 to $106 to $109 should be drawn in by a sustained move above $101.45. A strong endorsement of this may even permit purchasing at $111.50, $113, and $117.

On the other hand, rejection between $101.45 and $106 may result in selling pressure, bringing WTI below support levels of $98 and $93.

Dixit continued, "A mid-trend could take the bearish charge to below $92, exposing WTI to $88-$80."

Gold: Weekly Market Activity The U.S. unemployment rate fell despite an underwhelming monthly addition of jobs that suggested the economy might not fare too badly, which caused gold to begin April trading with a fairly large weekly decline. That suggested that in the future, investors might rely less on safe havens like gold.

On New York's Comex, the front-month gold futures contract settled at $1,923.85 an ounce, down $25.35, or 1.3 percent. It lost 1.8% for the week, its second-biggest weekly drop in three. This was in contrast to its gain of 6.6% for the second quarter, which ended on Thursday.

Typically, gold acts as a protection against economic and political risks. In March, Comex's front-month contract reached $2,070, just $42 below the record high of $2,121 set in August 2020, as geopolitical tensions rose following Russia's invasion of Ukraine and inflation in the United States skyrocketed.

However, gold fell on Friday as the unemployment rate in the United States rose to 3.6% in March from 3.8% in February, despite the fact that job growth for the month came in at 431,000, which was about 12% below what economists had anticipated.

The Federal Reserve defines "full employment" as a jobless rate of less than 4%. Since December, when the unemployment rate decreased to 3.9%, the United States has technically experienced full employment.

As the yield on the U.S. 10-year Treasury note rose for the first time in six days, analyst Ed Moya of online trading platform OANDA stated, "A strong employment report has gold on the ropes even as the Treasury yield curve inverts again."

Moya stated, "While recession risks for the future are growing, the economy is still looking very good right now." "The shorter-end of the (yield) curve is steepening." Although the chances of bearish momentum winning out are increasing, it appears that gold could still trade between $1,900 and $1,950.

The Federal Reserve is keeping a close eye on how many jobs are added or lost each month in order to decide how much to raise interest rates to keep inflation from growing faster than the economy.

The US economy expanded at its fastest rate since 1982 in 2021, expanding by 5.7%, after contracting by 3.5% in 2020 as a result of disruptions caused by COVID-19.

However, inflation rose even more. The Personal Consumption Expenditure Index, which the Federal Reserve closely monitors for U.S. inflation, increased by 5.8% in the year to December and 6.4% in the year to February, marking the fastest growth since 1982. Only 2% per year of inflation is tolerated by the Fed.

The national bank cut rates to almost zero after the Covid episode in Walk 2020 and kept them unaltered for a long time to empower financial recuperation. The Federal Open Market Committee, or FOMC, of the Federal Reserve raised interest rates by 25 basis points, or a quarter of a percentage point, for the first time since the pandemic.

At the FOMC's next two meetings in May and June, unyielding inflation is prompting officials to consider a half-percentage point increase of 50 basis points. In order to bring inflation back to its target of 2% per year, the central bank has stated that it may raise rates up to seven times this year and continue its monetary tightening into 2023.

The labor market is “extremely tight,” according to Fed Chairman Jerome Powell, with strong demand and limited supply. In addition, he mentioned that more than a million positions had been filled in the first two months of the year.

The public authority's month to month Employment opportunities And Work Turnover Rundown report prior this week showed that employment opportunities floated close to keep highs in February as opening kept on outperforming recruits in a joblessness market that remained predominantly for laborers.

Gold: Technical Outlook According to Dixit of Skcharting, gold's primary trend was bullish, and longs are likely to continue adding to their positions with each major dip.

He mentioned that bearish momentum for the past week had stopped gold below $1,960 and put longs' nerves to the test at $1,890, only for the week to end at $1,924.

He stated, "Gold's price blueprint is interestingly volatile for the week ahead." A trustworthy Ichimoku leading and lagging analysis suggests a potential limited downside of $1,888 to $1,877, possibly even going as high as $1873.

Dixit stated that he anticipated robust buying at the test of value area, which has frequently served as demand zone.

He stated, "Gold is likely to rise to $1,928 - $1,958 - $1,980 - $2010 due to robust buying from these areas." On the other side, in the event that gold neglects to draw in purchasers at $1,888 - $,1873 region, anticipate that a more profound rectification should $,1850 - $1,820.