When the price of oil and gas pleases ordinary Ukrainians

9 January, 02:11 PM

Fears for the fate of the world economy lead to pressure on the oil market, a trend that is good news for every Ukrainian

Markets are gradually rolling into 2023, hoping that it will smile more kindly upon investors and speculators. So far, however, it is difficult to talk about what 2023 will look like as a whole, given that it is not easy to do this even just for the month of January. The markets haven't been able to decide where they should go for almost a month. As a Wall Street intern trying to impress the girls at the bar would say, the markets have gone sideways. And they continue to lie there. At the same time, however, they are showing fairly high volatility. There are the problems of the technology sector, and the risks of a recession, as well as the ongoing global uncertainty over Russia's war against Ukraine. As a result, it is difficult to make bets. As a result, the S&P500 will start Friday morning at 3808 points, which is only 17 points from two weeks ago. The technology sector is the hardest hit, which is natural, since it was there that a majestic bubble was inflated a year ago, deflating under the influence of rising interest rates. And the exit of people from the virtual world and back into the real one after the end of the pandemic cannot but have an effect. And Mark Zuckerberg keeps on hailing the wonders of his Metaverse, which nobody seems to be buying yet.

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The hardest hit is Tesla, whose shares continue to dig for the bottom. They are, however, yet to find it, apparently in solidarity with Elon Musk's tweets. At the same time, the fall in share price is occurring against a backdrop of good financial results for Tesla. But here, the company is paying the price for a period when its share price grew while few were paying attention to its financial results, so now it’s hard to convince anyone. But Tesla is not alone.

Amazon has announced a record reduction in employees, planning to lay off 18,000 people. Paradoxically, the problems with the technology sector, including the problems in the labor market of IT workers in Silicon Valley, who look like they will live through what financiers experienced after 2008, are superimposed on a generally very strong US labor market. And this also plays against the stock markets, because the release of each batch of strong numbers from the real economy makes us expect tougher decisions from the Fed on rates, which, against the backdrop of a growing and strong economy, can afford to fight inflation. And this is already a pain for the stock market, for which the main thing is the availability of cheap money that has nowhere to go. Such is the habit of the last decade.

Unlike the US, statistics from Europe and Britain are not as rosy, and China remains a key headache for the markets in principle, no matter how much the communists fudge their statistics, especially their coronavirus statistics. As a result, fears for the fate of the world economy have led to pressure on the oil market, a trend that is good news for every Ukrainian. As a result, on Friday morning the cost of a barrel of Brent is less than $80, and Russian Urals is trading below the $60 price ceiling, closer even to $50. This was the average price for Russian oil that was recorded in December. And this is against the backdrop of still unclear volumes of Russian oil sales, which, due to its political toxicity, not everyone is ready to buy. It is precisely here that there are not currently enough statistics to understand how much sales have fallen. The Russian economic leadership, rather like the Chinese, in order to avoid a stir, simply forbade their oil companies from publishing data. In this context, it is not surprising that the ruble exchange rate moved from 60 to 72 rubles per dollar in 2 months, but something tells us that so far, this has not solved the problem of the budget deficit.

Moreover, the price of gas on European exchanges also continues to be music to ordinary Ukrainian ears. Europe stubbornly refuses to freeze, and for Greta Thunberg’s birthday (she happened to turn 20 years old the other day), nature offered us yet more proof of global warming. As a result, it is spring in Europe, and the price of gas, which some Kremlin seers wanted to see at the level of $5,000 per thousand cubic meters, has already fallen below $700, which is even lower than a year ago. And while Europe is in no hurry to freeze, while there is more gas in storage than on the same date last year, it is hardly worth expecting an increase in the cost of natural gas. As it turned out, Russia’s gas weapon is scary only while hanging on the wall, but if this gun is removed and fired, you get a big flash in the pan and a black eye due to the strong recoil.

Ordinary Ukrainians can also be pleased with the GDP data for 2022. That is, of course, if one can be pleased with a 30% drop. But the key here is to exceed expectations. And first of all, the effect of Russian energy terror on the economy is less than expected. Perhaps the answer is the sharp increase in imports in November shown in the statistics of the National Bank, which apparently indicates the massive import of generators and other equipment that allows one to work even in blackout conditions. The hryvnia passed the New Year holidays confidently, demonstrating only a symbolic decrease of 1% on the cash market. Still, war is war, and budget spending at the end of December is not going anywhere. As a result, the pressure on the exchange rate has not gone anywhere. However, this year is purely symbolic. And on the morning of Friday, December 6, the hryvnia exchange rate on the cash market was about 40.6-40.7 hryvnia per dollar.

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