December 15. Three world central banks will hold their meetings this week This week, three meetings of the world's largest central banks will be held – the US Federal Reserve, the European Central Bank and the Bank of England. US Federal Reserve Market participants expect that the US Federal Reserve will announce a faster phasing out of economic stimulus and an earlier start of a new cycle of interest rate hikes. Consensus forecasts suggest that the volume of asset purchases by the Fed will decrease from $120 billion per month to zero no later than the end of March. Such a move will pave the way for further interest rate increases in the middle of next year. In addition, the main reason for such measures of the regulator is the off-scale inflation in the United States: it is at the highest level since 1982 (6.8%). Moreover, producer prices are also growing at the highest rate in the last decade. Previously, analysts assumed that the bad statistics were just the result of the distorting base effect of the previous year. ECB The European Central Bank will have to face for the first time the question of whether it should re-introduce some formal restrictions on the purchase of bonds. The term of the «Emergency Procurement Program in case of a pandemic» expires at the end of March 2022, and supporters of the «hawkish» policy of the regulator seek to restore some restrictions on the purchase of bonds. However, many analysts assume that the ECB will buy bonds worth 40 billion euros per month until the end of next year, and a rate increase is not expected until 2023. The regulator notes that it can afford to take its time with changes in monetary policy, since inflation in the region is not as high as in the United States, and the shortage of labor is still quite acceptable. Bank of England The Bank of England will have to choose between letting inflation expectations get further out of control, or raising interest rates just at a time when a new wave of coronavirus is slowing the economy. The appearance of a new strain of omicron in the country led to some tightening of quarantine rules in the country and allowed representatives of the British regulator to take a break and observe the development of events before moving on to «hawkish» rhetoric. And this is despite the fact that annual inflation in the country exceeded 5% in November. December 14. Price growth in Sweden has broken a record According to Statistics Sweden, inflation in the country in November reached its highest in almost 30 years amid rising electricity and fuel prices. It is noted that the inflation rate, according to the change in the consumer price index over the last 12-month period, amounted to 3.6% in November compared with 3.1% in October. The last time such figures were recorded was in December 1993. At the same time, it is possible that in December the inflation growth may be even more significant and it may approach 4%. But in 2022, according to experts, this indicator should decrease. Analysts specify that the contribution of energy resources amounted to about 1.8 percentage points, which corresponds to almost half of the inflation rate in November 2021. As we know, the European Union has faced a significant increase in gas prices, which has led to an increase in the price of electricity. And this, in turn, puts pressure on consumers and the economy. Low gas levels in storage facilities before the start of the heating season were also one of the reasons for the increased prices.
December 17. Producer prices in Germany in November rose to the highest in 70 years According to the Federal Statistical Office of Germany (Destatis), producer prices (PPI index) in Germany in November increased sharply by 19.2% compared to the same month last year. This growth was the highest since November 1951. It is worth noting that analysts predicted an even more significant increase in the PPI index in November – by 19.9%. The pace of price growth has accelerated for the eleventh month in a row, and the last five months the rise exceeds 10%. In particular, energy prices jumped by 49.4% in November: natural gas rose by 83.4%, electricity by 48%. The cost of intermediate products increased by 19.1%, consumer durable goods – by 3.7%, means of production – by 3.6%. Experts note that such an increase in the PPI index indicates a gloomy outlook for the economy during the Christmas season, as the German industrial sector continues to struggle with disruptions in supply chains and the threat posed by a new strain of omicron. December 16. The Bank of England unexpectedly raised the interest rate Following the results of the December meeting, the Bank of England presented an unexpected surprise to the markets, sharply raising the base interest rate from 0.1% to 0.25%. The decision was made by a majority vote. In addition, the regulator unanimously decided to leave the volume of the asset repurchase program at the level of 895 billion pounds, including the repurchase of government bonds in the amount of 875 billion pounds. Analysts' forecasts did not suggest such actions by the central bank. The last time the British regulator changed the rate in 2018 – then it rose to 0.75%. After that, it either remained at the same level or decreased. Representatives of the Bank of England said that such a decision was due to the acceleration of inflation to a ten-year high. In November, consumer prices increased by 5.1% compared to the same indicator in 2020. At the same time, the target level of the central bank is in the region of 2%.
December 20. The Turkish Lira has updated the anti-record again On Monday, the Turkish lira exchange rate collapsed again, updating another anti-record. The quote of the USD/TRY pair is 18.41 lira per dollar. During the day, the currency lost about 10%. Back in January 2021, the lira was trading at the rate of 7.4 lira per dollar. During the year, the currency has fallen in price by more than 60%, and the lira has lost more than 40% of its value over the past month. The driver of the weakening of the lira was another reduction in the interest rate by the central bank of Turkey. On Thursday, the Central Bank decided to reduce the discount rate from 15% to 14%. The regulator also announced new direct currency interventions. Turkish President Tayyip Erdogan is in favor of reducing the discount rate, arguing that this will lead to lower inflation. However, many do not agree with Erdogan's policy. As a result, since July 2019, the president has already changed the head of the central bank three times and the finance minister twice since November 2021.
December 21. Tesla leaves the list of «trillion companies» Tesla Inc. rose 35% in October after a deal was struck with car rental company Hertz Global Holdings Inc. This collaboration signaled a wider spread of electric cars, which caused an increase in the value of securities, but after this rally gradually began to subside until it completely evaporated. Immediately after ordering Hertz for 100,000 cars, Tesla's shares rose so that the company's valuation significantly exceeded the coveted $1 trillion mark. However, Tesla shares fell 3.5% yesterday to close at $ 899.94. That is, even below the level at which they closed before the announcement on October 25 of the Hertz deal worth $ 4.2 billion. Analysts say that the decline in the value of shares was due to the fact that Elon Musk began to get rid of part of his stake in the company. Tesla's market cap is now around $904 billion. Further pressure on prices came from a severe downturn in the renewable energy sector, including the production of solar panels and electric vehicles. The market decline came after Senator Joe Manchin said he would not support President Joe Biden's $2 trillion spending plan.
December 22. Oil prices rose sharply amid the energy crisis in Europe Yesterday, oil prices showed a steady increase against the background of the energy crisis in Europe: the cost of gas in the region overcame another historical maximum at $2,187 per thousand cubic meters. And in such conditions, the demand for petroleum products will inevitably grow. On Wednesday morning, Brent oil quotes settled at $73.91 per barrel. Yesterday's daily high was marked at $74.57. North American WTI crude oil rose to $71.78 per barrel. Additional support for the oil market was provided by yesterday's data from the American Petroleum Institute (API), according to which crude oil reserves in the United States decreased by 3.67 million barrels. Today, we should pay attention to a similar report from the US Department of Energy, and if official data also confirm a reduction in raw materials stocks – this will be the fourth week of decline in a row. Analysts and market participants also continue to monitor the situation with the emergence of a new omicron strain of coronavirus. Experts fear that the new strain carries even greater risks for global oil demand than its predecessors. «Any threat of falling demand will contribute to investors avoiding risks and outflow of funds from energy markets,» experts say.
December 23. Oil is declining after yesterday's jump Last night, after the release of statistics from the US Department of Energy on crude oil reserves in the country, Brent quotes jumped sharply to the level of $75.71 per barrel. Today, the price is declining, approaching the $75.00 mark. The price of WTI crude oil showed a decrease from $73.20 to $72.50 per barrel. According to official weekly data on the energy market in the United States, stocks of raw materials decreased by 4.7 million barrels, while analysts predicted a smaller reduction – by only 2.7 million barrels. Oil reserves in the States have been declining for the fourth week in a row. At the same time, gasoline reserves increased by 5.53 million barrels, distillates – by 396 thousand barrels. Additional support for the market is provided by various news that helps to reduce nervousness about the omicron strain, as well as the release of good statistics on the United States. The US GDP in the final assessment and the consumer confidence index from the Conference Board came out better than expected. Quotes are also supported by the news about the suspension of production at several fields in Libya, as a result of which the country lost more than 300 thousand b/d of production.
December 27. Great Britain faces a serious energy crisis Analysts do not exclude that the UK will face a worsening economic situation due to gas prices, similar to what happened during the 2008 financial crisis. Stephen Fitzpatrick, chief executive of OVO Energy, the nation's second-largest energy supplier, compared the current state of affairs to the period between the collapse of the Northern Rock bank and the collapse of Lehman Brothers a year later. The current crisis is not expected to end soon. Moreover, Fitzpatrick accused the British authorities of being too slow in finding suitable solutions to break the impasse. The UK government itself said it was in constant contact with representatives of the energy industry, and promised to protect consumers from rising prices. Among the main causes of the energy crisis in Europe are unfavorable weather, inefficient operation of wind farms this year and insufficient gas reserves in underground storage on the continent. Britain also believes that Russia was the culprit in the crisis in Europe, but Moscow has denied the allegations. He pointed out that the European Commission itself insisted on the market pricing of the energy carrier, which ultimately led to the crisis.
December 29. Mexico will stop exporting oil Mexico has decided to process almost all the oil produced in the country on its own. In 2023-2024, the Dos Bocas oil refinery and the Kangrejera petrochemical complex will be launched, said Octavio Oropesa, head of the Mexican oil and gas state company Pemex. It follows from this that Mexico will almost 100% abandon oil exports. Earlier, the country's president Andres Manuel Lopez Obrador has already stated that the government intends to stop exports before the expiration of Obrador's term in 2024. By doing this, the authorities intend to preserve hydrocarbon reserves for future generations. Pemex's loss amounted to $4 billion in January-September. The company increased oil production to 1.73 million barrels per day, and exports of «black gold» increased by 58% to $25.2 billion. Recall that back in April 2020, the OPEC+ countries agreed to reduce production by 10 million b/d, but Mexico refused to reduce production by 400 thousand b/d, putting the deal on the verge of collapse. The situation was saved by the United States, which agreed to reduce its quota by 400 thousand b/d. Experts note that if Mexico withdraws from the world oil market, it will facilitate the procedure for concluding agreements within the framework of OPEC+. At the same time, Mexico's share in the world market may be taken by Russia, Saudi Arabia and the United States. December 28. Gold has risen to a maximum of the last five weeks Gold prices on Tuesday rose to the highest level in five weeks, reaching $1,819.35 per ounce. The current quote of the precious metal is $1817.75. The last time such values were recorded was in mid-November. Prices were supported by the weakening of the dollar, since strong statistical data from the United States and high inflation did not lead to a jump in the exchange rate of the US currency and the yield of government bonds. The US economy in the third quarter grew by 2.3% in terms of annual rates, the estimate of the indicator was increased from the previous 2.1%. And the PCE Core index, a key inflation indicator for the Federal Reserve, jumped 4.7% in November compared to the same month last year, the fastest pace in more than 30 years. This week, gold may well continue to rise, but the growth will be short-lived. Analysts note that gold's attempts to demonstrate a significant recovery are still inconclusive, and traders cut long positions at the first signs of trouble. As for the other metals, the picture is as follows: silver rose 0.2% to $23.08 per ounce, platinum rose 0.3% to $973, and palladium fell 0.7% to $1957.68, retreating from the more than monthly peak reached in the previous session.
January 4. Prospects of the precious metals market In 2021, everything except precious metals rose in price: oil jumped in price by 55%, copper increased by 25% over the year, and inflation in the United States reached a 40-year high of 6.8%. At the same time, gold not only did not grow, but also lost about 4% in price over the year. In fact, there is quite a logical explanation for this. The gold market is under pressure from the tightening of monetary policy by the US Federal Reserve. Market participants fear that the beginning of a cycle of interest rate increases will inevitably play against gold. Which leads to the fact that the market begins to look for more profitable instruments. Many investment banks have already submitted their forecasts for 2022. In particular, JPMorgan expects an average gold price of $1,630 per ounce in 2022. Deutsche Bank is more conservative and expects $1,750 at the end of the year. The current price of an ounce of precious metal is $1808. However, there are also those who hold more positive views on the dynamics of gold, expecting its value in the new year at the level of $ 2000-2100 per ounce. Investors believe that the «fashion» for risky assets will not always be relevant, so when gold becomes a sought-after asset again, its value can easily grow by 15-20%. Especially after a bad year. There are many reasons that can change the vector of the direction of gold: there is an out-of-control inflation, new Covid strains and restrictions, as well as geopolitics and general tension in the world. January 3. What awaits the oil market in the new year During the first trading day of the new year, the oil market demonstrates a multidirectional movement, first continuing the decline that began at the end of the past year, and then sharply jumping up. The current Brent quote is $78, WTI oil is trading at $75.38 per barrel. The pressure on prices is exerted by the continuing concern of the market about the fall in demand due to the new strain of the omicron coronavirus. At the same time, analysts note that due to mass vaccination in 2021, the threat of Covid in the world has significantly weakened, and by the end of 2021, Brent has grown by 34%, and WTI – by 38%. The growth was mainly due to the gradual lifting of restrictions on air travel and tourism and, accordingly, the growing demand for oil. Predicting the movement of the oil market in 2022, analysts note that the periodic appearance of new strains of coronavirus may cause the resumption of lockdowns and restrictions in certain countries and sectors of the economy. Therefore, the oil market situation in the new year will not be too stable, and the market is waiting for sharp price fluctuations. Another risk for the oil market in 2022 may be an increase in oil production in the United States. According to the IEA forecast, the supply of oil will also increase sharply in Canada and Brazil, and this will mean that there will be an excess supply of oil in the market of 2 million b/d, of which 1.1 million b/d will be for oil production in the United States. Tomorrow, January 4, a regular meeting of the ministers of the OPEC+ member countries will be held, at which the parameters of the implementation of the current agreement on increasing oil production by 400 thousand barrels per day will be discussed, and quotas for January will also be set. Most likely, they will remain unchanged – the same as in December 2021. However, if the threat of new, more dangerous Covid strains persists, OPEC+ may temporarily suspend production increases due to uncertainty about future oil demand. For 2022, we predict that the price of Brent oil will move on average in the range of $65-$90 per barrel, and during the first quarter of 2022 – in the range of $69-79 per barrel.
January 5. Europe may be left without gas in two months Experts note that against the background of the energy transition, gas reserves in the EU turned out to be insufficient, which could lead to the fact that by the end of winter, the level of reserves in storage facilities could fall to a historic low of 15%. Today, Europe is in the midst of the so-called energy transition – countries are closing coal-fired power plants, thereby increasing dependence on renewable energy sources. And although wind and solar energy is much cleaner, these sources are fickle: last year, electricity generation in Europe fell sharply. And since there are still two cold winter months ahead, gas in European countries may simply run out. Storage facilities in Europe are 56% full, which is 15 percentage points lower than the average for ten years. According to analysts, if Russia does not increase gas supplies, by the end of March, the level of reserves in Europe will drop to 15%, which could be the lowest in history. Experts note that without additional supplies of Russian gas via the Nord Stream-2, 2022 will be another unstable period for European prices for blue fuel. Last year, exchange prices for gas in Europe broke several records. On December 21, the cost of fuel for the first time exceeded $2 thousand for 1 cubic meter . This was caused by a decrease in pumping through the Yamal-Europe gas pipeline, information about the launch of Nord Stream 2 no earlier than the second half of 2022, as well as news about a possible cooling in Europe.
