Oil prices are rising on Thursday after a significant drop in the previous two sessions amid concerns about the prospects of demand.
The cost of March futures on Brent crude at London’s ICE Futures Exchange is $78.75 per barrel by 7:10 a.m. KSC on Thursday, which is $0.91 (1.17%) above the closing price of the previous session. Those contracts fell by $4.26 (5.2%) to $77.84 a barrel at the close of trading on Wednesday.
The price of WTI futures for February at electronic trades of NYMEX grew by that time by $0.87 (1.19%) up to $73.71 per barrel. By the close of previous trading the cost of those contracts fell by $4.09 (5.3%) to $72.84 a barrel.
Oil prices fell by about 9% during the last two sessions due to an increase in COVID-19 in China, which clouds short-term oil demand prospects in that country.
In addition, fears of energy shortages in the global market during the winter, which supported prices in recent months, weakened, given the milder-than-expected winter weather in the U.S. and Europe, notes Bloomberg.
The focus of traders on Thursday is the report on energy stocks in the U.S., which will be released by the U.S. Department of Energy at 18:00 ksec.
The American Petroleum Institute (API) data published a day before showed a 3.3 mln barrels increase of US reserves for the week ended December 30.
Ukrainian President Vladimir Zelensky held a conversation with French President Emmanuel Macron on Wednesday, during which he discussed cooperation in the process of strengthening the Ukrainian air defense system.
“Had a long and detailed conversation with French President Emmanuel Macron regarding the current situation,” Zelensky tweeted.
The head of state said that during the conversation he thanked Macron “for the decision to transfer light tanks and Bastion armored personnel carriers to Ukraine, as well as the intensification of work with partners in the same direction.”
The Ukrainian president stressed that during the conversation the interlocutors also agreed on further cooperation in the process of “significant strengthening” of the Ukrainian air defense system and other defense capabilities.
“We also agreed to work on the implementation of the Peace Formula,” Zelensky concluded.
The U.S. dollar is stable against the euro in trading on Thursday, getting cheaper against the yen, despite the hawkish tone of the Federal Reserve’s (Fed) December meeting minutes published the day before.
The ICE-calculated index showing the dollar’s performance against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is stable in trading, while the broader WSJ Dollar Index is adding 0.01%.
As of 8:00 a.m. Ksk on Thursday, the euro/dollar pair is trading at $1.0610, up from $1.0606 at the close of the previous session.
The value of the U.S. currency in a pair with the yen dropped to 132.47 yen, compared to 132.63 yen in previous trading.
The pound to dollar exchange rate fell to $1.2040 against $1.2054 the day before.
Minutes of the December meeting of the Federal Reserve showed that none of the Fed’s leaders believes it is reasonable to reduce the benchmark interest rate in the beginning of the year, as the financial markets expect.
Meeting participants generally believed that “maintaining restrictive monetary policy for an extended period until inflation clearly moves toward 2 percent would be justified,” the minutes said.
At that, the U.S. Central Bank confirmed its desire to achieve slowdown of inflation without excessive weakening of economic activity, Bloomberg agency notes.
Heads of Fed named two main risks as preservation of the raised inflation during longer, than it is expected, interval, and also the fact that the cumulative effect from raising rates can appear with some delay and lead to excessive toughening of financial conditions.
In December the Fed raised the rate by 50 basis points (bps) – to 4,25-4,5% per annum, while at the previous four meetings the rate was increased by 75 bps. At the same time, Fed Chairman Jerome Powell said the U.S. central bank will raise the rate until it meets its inflation targets.
Investors are waiting for the U.S. labor market data for December, which will be released on Friday at 15:30 ksec. Experts polled by Trading Economics on average expect the number of jobs in the U.S. to rise by 200,000 last month and unemployment to remain at 3.7%.
Ukraine last year exported, according to preliminary data, 99.8 million tons of products and goods of all kinds for a total of $44.1 billion, which is respectively 38.4% and 35% less than in 2021.
“Nevertheless, in war conditions it is a feat: to export almost 100 million tons of products (of which 16.3 million tons through the grain corridor) under conditions of the blockade of ports and constant attacks on the infrastructure. This is the first year that export volume and logistics have come to the fore,” Taras Kachka, deputy minister of economy and trade representative of Ukraine, wrote on Facebook on Wednesday.
According to his data, exports of 24.99 million tons of corn last year brought Ukraine $5.94 billion (+1% by 2021), revenue from foreign shipments of 4.29 million tons of sunflower oil (-16, 3%) was $5.46 billion (-14.4%), from 23.9 million tons of iron ore (-45.9%) – $2.9 billion (-57.8%), from exports of 11.2 million tons of wheat (-44.1%) – $2.6 billion (-44.7%), and from exports of 3.12 million tons of rape (+17%) – $1.54 billion (-8.6%).
“Sunflower seed made its way into the top 10 exports. We exported it 2.7 million tons worth $1.26 billion, 33 times more than last year. This is the volume that the oil extraction plants could not process. I hope that in 2023 we will have a reverse flow, when seed exports will decrease and oil exports will increase proportionally,” Kachka said in a statement.
According to his data, the export of one of the traditional leaders of industrial exports – 65.9 thousand tons of insulated wires brought Ukraine last year $1.32 billion, which is 16.4% less than in 2021. This reduction was caused by a 13.6% drop in wire exports.
“Next in the ranking – semi-finished steel products and hot-rolled steel – illuminate the whole tragedy of the Ukrainian metallurgy. The drop in volume for the year is -72%. Total exports of semi-finished steel 1.9 million tons worth $1.1 billion, and hot-rolled steel 1.3 million tons worth $1 billion. But even more vividly compare January and December. In January there were 404 thousand tons, in December – 31 thousand tons,” emphasized the trade representative.
Kachka specified that foreign sales of soybeans in 2022 was a rare case of significant growth in spite of the war: physical volume of export increased 81.6% up to 1.99 million tons compared to 2021, while revenues increased by 43% up to $862 million.
In turn, poultry exports were down 10% by 2021 to 413,000 tons, but it brought in 19% more revenue – $852 million.
According to the trade representative, geographically 63% of exports were in the EU ($27.9 billion). Among the EU countries, last year Poland ($6.6 billion), Romania ($3.8 billion), Hungary ($2.27 billion), Germany ($2.23 billion), Italy and Spain ($1.5 billion) received the most.
Outside the EU, the largest export market is Turkey ($2.9 billion), which is ahead of China ($2.46 billion), although it is respectively 29% and 69% less than in 2021.
In addition, imports to Ukraine in 2022 in physical terms have almost halved (-48.1%), and in monetary terms – 19.6%. In 2021, Ukraine imported 35 million tons of products worth $58 billion.
“Of the 99.8 million tons by sea exported 53.8 million tons. This is 55% less than last year. By rail, 33.7 million tons were exported. “Iron” stability is +3.4% or +1.1 million tons compared to 2021. 12 million tons were exported by road, and that’s a fantastic 32.4% increase over 2021,” the trade representative summarized in a statement.
Ukraine’s state budget deficit in December due to the receipt of a significant amount of grants decreased to 99 billion UAH from a record level of 170 billion UAH a month earlier, including the general fund – to 101.3 billion UAH from 163.3 billion UAH, the Ministry of Finance said on its website.
According to its operational data, in general, the state budget of Ukraine in 2022 executed with a deficit of 911.1 billion UAH, including the general fund – 909.5 billion UAH against the planned in the estimate 1399.5 billion UAH.
The Ministry of Finance specified that the actual state borrowings to the general fund of the state budget for 2022 amounted to 1261.1 billion UAH or 67.3% of the planned for this period, including from the placement of government bonds, 666.9 billion UAH, of which 103.9 billion UAH in foreign currency ($2.1 billion and EUR 980.6 million), and by 400 billion UAH hryvnia securities were purchased by the National Bank.
According to preliminary data of the Ministry of Finance, about $31 billion was financed from foreign sources, including about $14.3 billion, or 480.6 billion UAH in grants, which are recorded as state budget revenues.
As reported, in 2021, the deficit of the general fund of the state budget of Ukraine was 166.8 billion UAH, including in December – 108.1 billion UAH.
The state budget of Ukraine for 2023 was approved with a marginal deficit of 1296.5 billion UAH, including for the general fund – 1124.6 billion UAH.
