US indices are set to start today’s session lower as the conflict in Ukraine threatens supply chains and drives commodity prices higher. During yesterday’s trading session, the S&P 500 dropped 1.55%, Dow Jones moved 1.76% lower and Nasdaq declined 1.59% while the Russell 2000 dropped 1.93%. Intense shelling of Kharkiv was reported overnight and Russian attacks on residential areas and civilian buildings are becoming more frequent while the west continues to evaluate an escalation of sanctions, some of which have led to Sberbank, Russia's largest bank, informing that it will be shutting its European market business as it is no longer able to supply liquidity to its units in Europe. Despite some important data expected from the US, including the ADP employment report as well as the FED chair Powell testifying in congress, investors remain focused on further headlines and developments from the ongoing conflict in eastern europe which is sending shockwaves across markets. While negotiations are set to continue between the opposing forces, it remains to be seen if these will manage to and provide some relief
Oil prices reach record levels despite strategic petroleum reserve release
Concerns over possible disruptions on the oil market are sending Brent prices to the sky as WTI reached the highest level since 2013. Brent OIL is trading almost 60% year-to-date higher and it may not be over as the geopolitical tensions escalate and more companies continue to exit their shares in Russian energy companies with some of the most notable being BP and Shell. The release of strategic petroleum reserve release did little to ease upward pressure and OPEC+ is unlikely to decide on a bigger than 400,000 barrel hike today while traders also await the EIA petroleum report from the US, which is set to show an increase of 2.8 MB, after yesterday's API report indicated a 6.1 MB inventory draw. Unless the geopolitical situation begins to ease, or there are some major developments which would allow a noticeable increase in supply to reach the markets from elsewhere, we could be seeing a continuation of this trend that will ultimately have cascading effects across most asset classes and on consumer prices which are all related to energy prices.
