Oil rally cools after Germany pushes back on Russian oil ban


A rally in oil prices slowed and moves in equity markets in Asia were limited on Tuesday after Germany pushed back on US efforts to ban Russian crude.

Brent, the international crude benchmark, rose 1.7 per cent to $ 125.31 a barrel in Asia trading after finishing the previous session up more than 4 per cent. West Texas Intermediate, the US marker, was up 0.7 per cent at $ 120.26.

Brent had jumped almost 18 per cent to $ 139 on Monday after the US said it was in discussions with European allies to freeze Russian oil imports in retaliation for the invasion of Ukraine.

But prices pulled back after German chancellor Olaf Scholz indicated Berlin was reluctant to throttle trade he considered of “essential importance” to the European economy.

European natural gas prices settled about 5 per cent higher at € 215.50 a megawatt hour, after jumping as much as 40 per cent earlier on Monday.

The threat of a ban on Russian oil rattled Wall Street, sending the S&P 500 down almost 3 per cent and the tech-focused Nasdaq Composite 3.6 per cent lower. The Euro Stoxx 50 fell more than 1 per cent as Moscow warned of “catastrophic consequences” for blocking its oil.

The conflict in eastern Europe has thrown global markets into tumult, driving up commodity and energy prices to record highs, threatening to push inflation higher and boost the cost of production for vital materials.

The outsize role of Ukraine and Russia, which accounts for almost a third of global output, in wheat exports has raised concerns over global supply.

Caroline Bain, chief commodities economist at Capital Economics, said blocking Russian energy exports would push Brent to about $ 160 a barrel and “energy prices would stay higher for longer as it would take time to supply to pick up the fill of the shortfall.”

Asia equity markets moves were limited after sharp falls across the region during the previous session. Hong Kong’s benchmark Hang Seng index rose 0.3 per cent and Japan’s Topix shed 0.5 per cent. China’s CSI 300 index was down 0.6 per cent.

Havens fell as the global sell-off abated in Asia, with yields on 10-year US Treasuries rising 0.02 percentage points to 1,787. Yields rise as bond prices fall.

Futures tipped European stocks to fall further in the wake of the US sell-off, with the Euro Stoxx 50 expected to fall 1 per cent. The S&P 500 was set to edge up 0.3 per cent when Wall Street opens later in the day.



Source link

Leave a Reply

Your email address will not be published.