May 25, 2022

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Oil rises on US ban on Russian oil, Asian stocks fluctuate

Oil rises on US ban on Russian oil, Asian stocks fluctuate

A man looks at stock market watchers in Taipei, January 22, 2008. REUTERS/Nikki Luo

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  • Brent crude rose 1.88% above $130 a barrel
  • European stock exchanges are preparing for a more assertive opening
  • The United States imposes an embargo on Russian oil and Britain to gradually abandon imports
  • MSCI Asia excluding Japan turns lower, Chinese stocks fall in the afternoon

SHANGHAI (Reuters) – Crude oil prices rose again on Wednesday as Asian stocks struggled for stability as investors assessed the impact of the worsening conflict in Ukraine and a new U.S. embargo on Russian oil.

But in Europe, stocks were poised for a stronger opening. German Euro Stoxx 50 and DAX futures are up about 2% and FTSE futures are up 1.36% in early trades.

“It’s not really… a risky rally. It’s more than investors have less reason to sell than they did previously, nothing has changed sentiment, and you’ll probably have some short selling coverage there,” said Matt Simpson, senior market analyst. At City Index in Sydney.

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The price of a barrel of crude oil, which had already risen in January due to supply concerns and expectations of a global economic recovery, has skyrocketed since Russia launched its invasion of Ukraine on February 24. Oil has now nearly doubled in early December. a little.

At the risk of rising fuel prices in the United States that could curb economic growth, President Joe Biden on Tuesday imposed an immediate ban on imports of Russian oil and other energy in response to the invasion, amid strong support from American voters and lawmakers.

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This ban comes at the forefront of comprehensive US and European sanctions imposed on Moscow for waging the largest war in Europe since World War II. Russian strikes targeted Ukrainian cities and killed hundreds of civilians. Read more

Britain also announced that it would phase out imports of Russian oil and petroleum products by the end of 2022. Read more

“The oil shock is inherently cumulative rather than one-off, and the potential for the market to reach $150 before returning to $100 is easy for investors to digest,” said Stephen Innes, managing partner at SPI Asset Management.

“Imposing sanctions without first developing an alternative supply contingency threatens Brent crude (rising) much higher.”

Brent crude was last traded at $130.38 a barrel, up 1.88% on the day, but still far from Monday’s peak of $139.13.

US West Texas Intermediate crude rose 1.52% to $125.58 a barrel.

Russia has called its actions in Ukraine a “special operation” and warned earlier this week that prices could rise as high as $300 a barrel and could shut down its main gas pipeline to Germany if the West blocks its oil exports. Read more

In stock markets, MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 0.10%, as a sharp reversal in Chinese stocks erased earlier gains.

Excellent Chinese CSI300 Index (.CSI300) It briefly fell as much as 4.6% in the afternoon on what Zhang Yanbing, an analyst at Zheshang Securities, said was a technical acceleration near the bottom of the market.

Chinese stocks struggled in the morning session after inflation data showed a combination of weak domestic demand and higher commodity prices, while coronavirus cases continue to rise. Read more

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In Hong Kong, where infections have risen to record levels, Hang Seng (.HSI) The last drop was 2%. Read more

But broader regional losses have been kept in check by gains elsewhere, with the resource-heavy Australian ASX 200 (.AXJO) Taiwan shares rose 1.04% (.twii) A rise of 1.13%.

In Tokyo, the Nikkei (.N225) It decreased by 0.3%.

“I think we’re tired of Russia. We now have 10-12 days of bombing Russian headlines. And while it’s tragic what’s going on there, at the same time I think we’ve effectively appreciated the worst of it,” said Simpson of City Index.

Volatile stock price movements in Asia came after another day in the red on Wall Street, where the Dow Jones Industrial Average (.DJI) The S&P 500 is down 0.56%. (.SPX) The Nasdaq Composite Index lost 0.72% (nineteenth) It decreased by 0.28%.

“Markets remain volatile and unable to be confident in the price implications of the news flow given the complex state of the global economy,” said Rodrigo Cattrell, senior foreign exchange analyst at National Australia Bank.

On an uncertain background, the yen settled against the dollar at 115.70, while the dollar was down 0.2% against a basket of its peers to 98.919.

The euro rose 0.23% to $1.0924, and the ruble was last seen at $122.5 to the dollar.

US Treasury yields are down, with benchmark 10-year yields at 1.8490%, down from 1.871% late Tuesday. The two-year note registered 1.6069%, down from 1.629%.

The price of gold fluctuated between small gains and losses, last falling 0.18% to $2,048.77 an ounce.

(Reporting by Andrew Galbraith) Editing by Kim Coogle and Christopher Cushing

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