Today in the Asian session crude oil gave back 42 cents to trade at 95.12 while Brent oil is down just 15 cents at 102.22.
Global movements have much to do with that: Ukraine and Russia have
sealed a deal to end tensions between the two countries and had a great impact on markets.
- Global oil
prices rebounded on Wednesday in response to a weaker US dollar.
- A
weaker greenback improves the purchasing power of commodity buyers in
Europe and Asia.
- Brent crude rose by S2.43 or 2.4 per cent to 102.77 a barrel with WTI prices up by $2.66 a barrel to 95.54 a barrel.
The ceasefire would also have a big impact on Europe, especially Germany which does a lot of trade with Russia and Ukraine. The sanctions and fighting have taken a toll on the European economy, so much so that Europe stalled to nearly zero growth in the second quarter. There’s pressure on the European Central Bank to do more to aid the Eurozone economy when it meets today. It’s unclear if a ceasefire would have any impact on their decision.
Ukraine has received material help from the European Union as Slovakia finally opened a pipeline to deliver much needed essential gas to the war-torn country. The reverse gas flows should be able to cover Ukraine’s mid-term gas import needs, Slovak Prime Minister Robert Fico said in a news conference at the pumping station near the Ukraine border. The pipeline will carry gas from Slovakia, Hungary and Poland. Ukraine’s Prime Minister Arseny Yatsenyiuk said the gas from this specific pipeline could supply 20 per cent or a fifth of the country’s needs.
Russia, Europe’s biggest supplier of oil, coal and natural gas,
supplied half of the 50 billion cubic meters of gas Ukraine that used in
2013. In cutting Ukraine’s supplies in June, Russia defended it had to
do it because the Kiev had not been paying its bills on time, having already had a substantial debt.
A weaker dollar and expectations of a decline in US crude stocks supported oil prices, which on earlier this week plummeted in reaction to a sharp gain in the dollar and concerns over slowing oil demand growth in China and Europe. US stock reports were delayed a day due to the US holiday on Monday and will be released as the US markets open today. The latest US inventory reports are expected to show crude and refined fuel stocks dropped last week, according to a Reuter’s survey, potentially supporting prices. Investors have mostly grown tired of threats to supplies from conflict in the Middle East and North Africa, focusing instead on the lack of further disruption to oil flows in Iraq and rising output in Libya.
