Oil prices fluctuate slightly but end the week with growth, Brent – $86.99 a barrel
Oil prices fluctuated weakly and multidirectionally in trading on Friday, but finished the week with a strong increase, thanks to signals of gradual easing of quarantine restrictions in China.
Several major Chinese cities announced the easing of quotas, which allows investors to hope for an increase in business activity and, accordingly, demand for oil in the country.
Guangzhou, Shijiazhuang and Chengdu relaxed requirements relating to the regularity of tests for COVID-19 and the movement of citizens, Bloomberg reported. Markets and public transportation began operating in some areas. In Beijing, sick people were allowed to stay at home instead of being isolated in special centers.
The cost of February futures for Brent crude oil on London’s ICE Futures exchange was $86.99 a barrel by 6:15 a.m. KSC on Friday, up $0.11 (0.13%) from the previous session’s close. Those contracts fell $0.09 (0.1%) to $86.88 a barrel at the close of trading on Thursday.
The price of WTI futures for January oil at NYMEX fell by $0.03 (0.04%) to $81.19 per barrel by that time. By closing of previous trades these contracts grew by $0.67 (0.8%) to $81.22 per barrel.
Since the beginning of this week, Brent has risen 4% and WTI more than 6%.
“We should not expect a sharp reversal of Chinese policy, but any easing of covid restrictions is welcome,” said OANDA chief analyst Craig Erlam. – The PRC’s approach to fighting the coronavirus has been devastating for the economy and the trust of citizens, and the protests have shown how public attitudes have changed.”
The focus for traders this week is the next OPEC+ meeting this weekend, and the market largely expects the organization’s states to decide to keep production levels unchanged, Bloomberg notes.
On Monday, an EU embargo on Russian oil purchases comes into effect.
In addition, according to the G7-approved plan, starting from December 5, the EU and British companies will be able to provide shipping and insurance services for transportation of Russian oil, only if it is bought at a price below a certain ceiling.
The Wall Street Journal reported Thursday, citing its sources, that the European Commission, in response to Russia’s continued war against Ukraine, proposed that the 27 EU countries approve a price ceiling on Russian oil of $60 per barrel.
The U.S. dollar is stable against the euro in trading on Friday, getting stronger against the pound and cheaper against the yen.
Traders will focus on the U.S. labor market report for November, which will be released at 3:30 p.m. Ksk.
The consensus forecast of experts polled by Trading Economics expects the number of jobs in the U.S. economy to increase by 200,000 in November and unemployment to remain at 3.7%.
The November labor market report is important to the Federal Reserve (Fed), which will hold its next meeting on December 13-14. Judging by futures quotations for the prime rate, the market expects the Fed to raise it by 50 bps. – to 4.25-4.5% per annum.
A new dot plot of forecasts will also be published at the end of the December meeting, reflecting the individual expectations of the members of the Federal Reserve Board of Governors and the heads of the Federal Reserve Banks with regard to interest rates.
Earlier this week, U.S. Central Bank Chairman Jerome Powell confirmed that the Fed could slow its rate hike as early as December.
Fed Vice Chairman of Banking Supervision Michael Barr on Thursday also argued in favor of a slower rate hike.
“We’ve been moving very, very quickly toward a rate level that would limit economic activity, and now that we’re very close to it, I think it makes sense to slow the pace of the hike,” Market Watch quoted Barr as saying.
The euro/dollar pair was trading at $1.0529 as of 8:20 a.m. Ksk Friday, up from $1.0527 at the close of the previous session. The pound fell to $1.2239, compared to $1.2256 at the close of trading on Thursday.
The dollar-yen exchange rate declined to 135.08 yen in trading, compared to 135.34 yen at the close of the previous session.
The ICE-calculated index showing the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona) lost 0.01% on Friday, while the broader WSJ Dollar Index lost 0.04%.
Sabotage by Russian inspectors in the Joint Coordination Center (JCC) of inspections of vessels bound for the Ukrainian Black Sea ports leads to low efficiency of their inspection – about 70 grain carriers piled up for a week to enter the “grain” corridor, and 30 – to leave.
According to the broker company Spike Brokers (Kiev) in Telegram-channel, grain traders are forced to lay more and more costs for demurrage of ships (up to 30 days) in the price of agricultural products, which “kills” the benefits for agricultural producers. Because of this, farmers are actively exporting their goods by land, strengthening trade relations with end consumers in Europe.
According to a brokerage company, for the past week, it has made deals for December-February delivery of feed wheat from Ukraine to Poland for $237/ton, rapeseed (non-GMO) to Germany – €595/ton, soybeans (GMO) to Ukrainian deep-sea ports – $415/ton. No data on sunflower sales have been made public this week.
She specified that domestic corn prices have stabilized at $205-230, depending on the place of delivery – in the port or to the land border crossings. Exchange quotations for wheat this week are in the nature of an “inversion” (a reverse market where spot is more expensive than contracts for future months). Recent buyer indications for the past week are DAP Poland (border) $210-220, DAP Turkey (port) $260-270, DAP Romania (port) $255-265.
“The proximity of the holiday month creates some constraints on the efficiency of cargo handling in Europe. Most buyers in Europe do not want to receive shipments by truck/rail between December 20 and January 5. In the direction of ports, buyer demand is expected to decline significantly until vessel throughput efficiency improves,” Spike Brokers stressed in a statement.
In turn, with low selling prices of wheat in Ukraine and the high cost of its logistics, domestic producers are suffering significant losses, which significantly constrains its supply. The latest indications of buyers: DAP Poland (border) – $230-245, DAP Hungary (border) – $230-242, DAP Ukraine (Danube ports) – $240-245.
According to the trader, the purchasing prices of oil extraction plants in Ukraine adjusted from $450 to $350 excluding VAT per ton of sunflower seed delivered to the plant: the saturation of demand in Ukraine occurs against the background of the fall in vegetable oil prices to $ 200 per ton. Thus, while oil prices on foreign markets will remain stable, there will be an increase in the supply of sunflower for export.
The latest indications of sunflower seed buyers: DAP Bulgaria (center) – $540-560, DAP Romania (center) – $500-530, DAP Hungary (center) – $540-555.
In addition, the saturation of the EU market with rapeseed from Ukraine and Eastern European countries does not give any chance for price strengthening at the moment. Latest buyer indications: DAP Germany (east) – €550-560, DAP Hungary (center) – €540-550.
“The soybean market remains at last week’s levels. Producers remain with good soybean balances for sale,” the brokerage clarified.
The latest soybean buyer indications for the week: non-GMO DAP Italy – €545-550, GMO DAP Italy (south) – €545-550.
A representative of the trading department of A.G.R. Agroholding. Group in a survey by Interfax-Ukraine agency noted that since the beginning of Russian military aggression, the logistical leverage for agricultural exports from Ukraine has increased, freight prices have risen, energy and fuel prices have risen. As a result, the group is forced to spend about $200 per ton of exports, a huge amount of money compared to the prewar $45-50 per ton.
“With the start of the war, we changed our crop rotation and switched to oilseed crops as much as possible – that’s more than 60% of our crops this year. Corn is a comfortable crop, but energy-intensive, and with the price of energy, gas, it’s just not profitable to work with. As a result, we have reduced the volume of its sowing and to a greater extent switched to oilseeds, thereby reducing the burden on the railway and road transport and combine maintenance costs, “- said the interlocutor of the agency.
One of the world giants in the food market, Dutch-British company Unilever is going to produce next year a dairy ice cream, made from cow’s milk, grown in a laboratory.
Next summer, supermarket shelves may be stocked with ice cream “made from cow’s milk without cows. It will be made from milk protein obtained by fermentation, which uses yeast and fungi, among other ingredients, to grow it in vats.
However, natural cow’s milk contains many types of protein, so producing it in the lab with a satisfactory result that allows the product to be used in the same way as “classic” milk is no easy task.
A number of startups have already submitted several prototypes of “lab milk” for consideration by Unilever. The company hopes to commercialize next year a new ice cream under one of its world-famous brands – Ben & Jerry’s, Miko, Magnum, but has not yet specified which one it will choose for the debut.
Unilever explains its idea as the aim to produce the product with less greenhouse gas emissions, particularly methane, which is inevitable in dairy farming, subject to the profitability of the new technology.
However, Unilever is not the first company in the food market, trying to introduce “milk without a cow. Last year, American Starbucks already tried to sell products based on “lab milk” produced by the startup Perfect Day in its cafes in the Seattle area.
Ukraine ranks seventh in the world in terms of Internet traffic.
“Ukraine is actively developing traffic exchange points. For four years now, the country has ranked seventh and is ahead of many other states that are much larger than Ukraine,” Bill Woodcock, Executive Director of Packet Clearing House (PCH), said at the UADOM conference in Kyiv on Thursday .
He also noted that PCH has been cooperating with the UA domain registry by Hostmaster since 2004.
“During this time, best security practices have been introduced in the Ukrainian domain, and now Ukraine is among the 25 most developed countries in the world that use the most advanced security technologies,” the PCH executive director emphasized.
Packet Clearing House is an international non-profit organization responsible for providing operational support and security for critical Internet infrastructure, including Internet data exchange points and the core of the Domain Name System.
The “.UA” domain was delegated by the international organization IANA (later renamed ICANN) to Dmitry Kokhmanyuk and Igor Sviridov in 1992 in the interests of the entire Ukrainian Internet community. For a long time, the administration and development of the domain on a voluntary basis was carried out by specialists who united the Ukrainian Network Coordination Group (UA NCG) and created in 2001 a specialized enterprise Hostmaster LLC, which currently performs the functions of an administrator.
Zaporizhstal steelmaker Zaporizhstal in January-November this year decreased the output of rolled steel by 58.5% compared to the same period last year to 1 million 247.2 thousand tons.
According to the company’s information on Thursday, steel production fell by 60% to 1 million 420.5 tons over that period, and iron production decreased by 53.1% to 1 million 867.8 thousand tons.
In November this year, the company produced 143.9 thousand tons of iron, 85.8 thousand tons of steel, shipped 74.4 thousand tons of rolled steel, while in the previous month – 157 thousand tons of iron, 121.8 thousand tons of steel, shipped 101.3 thousand tons of rolled steel.
“The decline in production levels compared to the same period last year is due to the shortage of raw materials and logistical problems caused by full-scale military action in Ukraine. In addition, due to the ongoing missile attacks on the energy infrastructure and, as a consequence, the resulting shortage of capacity in the energy system, the plant reduced production, thus reducing the consumption of purchased electricity,” the press release explains.
As it was reported, in 2021 “Zaporizhstal” kept the output of rolled steel at the level of 2020 – 3.204 million tons, reduced steel production by 0.1% – to 3 million 778.25 thousand tons and increased the iron – by 0.1%, to 4 million 473.5 thousand tons.
“Zaporizhstal is one of the biggest industrial enterprises in Ukraine, which products are in great demand among domestic and foreign consumers. The plant specializes in high-quality carbon and low-alloy steel coils, hot-rolled plates, cold-rolled sheets, cold-rolled coils, as well as steel straps, tin plates, formed sections.
Main consumers are producers of welded pipes, enterprises of automotive, transport, agricultural engineering, producers of household appliances.
“Zaporizhstal is in the process of integration into Metinvest Group the main shareholders of which are CJSC “System Capital Management” (71.24%) and Smart Holding group of companies (23.76%).
Metinvest Holding LLC is the management company of Metinvest Group.
