Relevance up to 06:00 2022-03-08 UTC–5
West Texas Intermediate crude oil futures, the benchmark for US crude, jumped 7.24% to $ 124.07 per barrel. At the moment, prices reached the level of $ 130. The international benchmark, Brent crude, is trading up 7.9% at $ 127.40 per barrel after a previous jump to $ 139.13 per barrel – the highest level since July 2008.
Today, during morning trading, futures on US indices fell, because, as I noted above, the price of oil in the United States jumped to the highest level since 2008 amid the ongoing war between Russia and Ukraine. Dow Jones futures lost 611 points or 1.82%, and S&P 500 and Nasdaq 100 futures fell by 1.87% and 1.82%, respectively.
Oil prices rose after Secretary of State Antony Blinken said on Sunday that the United States and its allies are considering banning imports of Russian oil and natural gas in response to the country’s attack on Ukraine. Speaker Nancy Pelosi also said in a letter to her Democratic colleagues that the US House of Representatives is studying all available laws to ban the import of Russian oil – a step that further isolates Russia from the global economy. Meanwhile, gas prices on the European market exceeded the level of $ 3,000.
Against this background, gasoline prices in the United States rose to the highest level since 2008. On Sunday, the average price per gallon of gasoline reached $ 4,009, which is the highest since July 2008, excluding inflation. Now consumers are paying 40 cents more than a week ago and 57 cents more than a month ago – this is a very serious blow to prices, which will directly result in a general inflationary jump, which the Federal Reserve System is so afraid of. In some states, consumers are paying much more: the California average is now $ 5,288 per gallon.
As for the geopolitical events that are pushing energy prices up and the stock market down, the evacuation plan for this weekend from Mariupol and Volnovakha was canceled after the Ukrainian Armed Forces did not allow civilians to leave the cities. This has only worsened the overall picture of what is happening in Ukraine.
Back on Friday, the Dow Jones index fell by 179 points or 0.5%. The S&P 500 lost 0.7%, and the Nasdaq Composite fell by 1.6%.
As for today’s premarket, the shares of energy companies are now the brightest spot on the market. Occidental Petroleum jumped another 8.8% after gaining a whopping 17% on Friday. Meanwhile, shares of banks that are going to benefit from future interest rate increases have fallen. This happened due to the decline in 10-year US bonds to 1.73%.
The data released on Friday by the US Department of Labor was not enough for investors to dismiss concerns about the war between Russia and Ukraine. On Friday, the US Department of Labor reported that 678,000 jobs were added to the economy in February. Economists had expected an increase of 440,000 people. The unemployment rate dropped to 3.8%.
As for the technical picture of the S&P 500
The pressure on the index remains, and there is much less good news than bad. Today, the bulls will try to gain a foothold above $ 4,292. If this fails, the pressure on the trading instrument will increase, which will lead to a decrease in the area of $ 4,233. A breakdown of this range will increase the pressure on the index and return the bear market with the prospect of updating the lows already: $ 4,175 and $ 4,113. Fixing above $ 4,292 will leave hope for a market recovery, however, what will happen in the regular session today is a big question. With growth, we can expect new active sales already in the region of $ 4,341 and $ 4,383. A lot will depend on the further development of the conflict on the territory of Ukraine and the possible dialogue between the presidents of the two countries.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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