Geopolitical risks on the rise, not just Ukraine

China company defaults and it seems to be hurting the copper market more than oil. Maybe because it was a Chinese solar company that missed its bond payment! How is that “jobs of the 21st century” thing going for you?

Well today we will get a look at U.S. jobs numbers that already the trade is downplaying because of old man winter. The market is looking for 150,000 jobs to 6.6% (came out 175K and 6.7%).  Still underneath the numbers there seems to be weakness that transcends the weather and oil demand seems to be weakening. Part of that may be seasonal but the products look weak.  Demand expectations are being challenged by weak us data, uncertainty in China and Japan’s nuclear restarts that will help cut gas and oil consumption.

Yet on the other hand, who wants to be short over the weekend with the Ukraine on the brink.  Oops don’t forget about Venezuela! Protest there as well. The battle between risk premiums vs. questionable demand for oil continues to divide the bulls and the bears.

Oil prices(NYMEX:CLJ14) seem to be slipping in a risk on trade as Brent started to build its premium against WTI.  President Obama and President Putin spoke for an hour and it seems that nothing really changed. Putin says they are still divided. While the Crimean local parliament (which was suspiciously newly elected during this crisis) votes unanimously to become part of the Russian Federation the potential for this turning ugly remains.

CNN reports that Venezuela’s President severed diplomatic relations with Panama, accusing the Central American nation of being a “lackey” for the United States in a conspiracy plot against his government. “There are maneuvers by the U.S. government plotting with a lackey government that has a right-wing president who is leaving in the next few months, who is not worthy of his people, who has been working actively against Venezuela,” President Nicolas Maduro said in televised remarks earlier this week.

He accused Panama of pushing for regional organizations to intervene in Venezuela. As a result, Maduro said he was cutting off diplomatic and political ties and freezing trade relations with Panama’s current government “in defense of the homeland’s sovereignty.”

The Euro currency(CME:ECM14) is on fire as the ECB stand firm keeping it refi rate steady. That is leading to dollar weakness and adding support across the commodity complex. Soybeans(CBOT:Sk14) wheat(CBOT:Wk14) and corn(CBOT:Ck14) are rallying on weather and short covering before USDA as well as concerns about Ukraine, the biggest wheat exporter and the third-largest exporter of corn. The risks in the Ukraine increase the demand for U.S. grain. Market players looked ahead to the USDA’s weekly export report later in the session to gauge the strength of global demand for U.S. supplies. The Australian dollar is going wild on strong economic data and strong coal exports.

 

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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