Showing posts from May 8, 2022

High energy prices and inflation: will the onset of the hurricane season make things worse?

  The impact of the surging crude oil prices, exacerbated by the steep rise in the price  of the LNG, liquified natural gas, on the global economy is now all too clear and the policymakers are scrambling for solutions before it reaches the point of no-return. In inverse proportion to the skyrocketing inflation, the spending power of the Western consumers in particular, and global consumers in general, is steadily shrinking and the major economies are already feeling the pinch: the economy of the United Kingdom, for instance, has shrunk by 0.1% in March, clearly signalling the struggling service sector due to high energy prices; analysts fear the worst for the same during April that is yet to be released. The picture in the rest of Europe is far from cosy as well, especially when the latter has been forced to look for substitutes for Russian commodities.  The first clear signal of an impending disaster came, when the stocks of the retail giant, Amazon, fell almost by 24% last month as a

Volatility in Crude Oil Markets: is concern over the Chinese economy, a major factor?

The volatility in the energy markets continues amidst growing uncertainty over the global economic growth, despite the catastrophic impact on the world from the Covid-19 virus clearly behind us.   As far as the crude oil markets are concerned, there was a significant fall in the prices on Tuesday, when the API, American Petroleum Institute, said in its weekly report that there was a crude build during the past week; it was much bigger than its own estimate for the same period. According to the API, there was a crude build of 1.618 million barrels, when the estimate was 1.2 million barrels. The EIA, US Energy Information Administration, meanwhile, reported on Wednesday even a larger crude build - 8.5 million barrels during the last week. As expected, a sizeable build of this kind triggers off a fall in oil price and that's exactly what happened on Tuesday - in the run-up to the release of the report and in its aftermath. On Wednesday, however, the prices have recovered temporarily:

Russian Victory Day Parade did not push the crude oil price

  The price of crude oil did not spike in the wake of the Russian Victory Day parade on Monday, in stark contrast to media speculations about declaring all-out-war against Ukraine. The combination of the impressive military marches and display of the latest military hardware, including the dreaded ICBMs is nothing new; Russians have been sticking to this theme for decades. As the theatrics of the parade died down, in the absence of any factor that could potentially exacerbate the current crisis, especially in the energy sector, the crude oil prices subsided slightly, leaving it at the usual fulcrum of supply and demand. Although the West wants to send a clear signal to Russia with an outright ban of oil and gas, there are effective currents that hinder the progress on this front: the latter stem neither from emotional sentiments nor ideological loyalties; there are genuine grievances over the supply of oil and gas, if a total ban comes into effect. Japan, for instance, admitted at the

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