Political | Process

Brent crude oil headed towards $100 a barrel for the first time since 2014, European natural gas prices jumped and Wall Street stocks fell on Tuesday after Russian president Vladimir Putin ordered troops into Ukraine.

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• The international oil benchmark rose as high as $99.5 a barrel, as traders calculated the possibility of disrupted supply from Russia. It later trimmed its gains to $96.79 a barrel, up 1.5 per cent on the day.

• The moves came after Putin directed his military to enter Ukraine’s rebel-held Donetsk and Luhansk regions, prompting Germany to halt the approval of the Nord Stream 2 gas pipeline.

• European natural gas contracts rose by about a tenth to €79.44 per megawatt hour, ahead of the US and western allies launching a package of sanctions against Moscow later in the day.

• European government bonds then came under selling pressure on the prospect of higher gas prices in the bloc exacerbating record-high inflation levels.

• “One of the very few definitive things we can see from this crisis is that energy prices are going higher,” said Bastien Drut, chief thematic macro strategist at CPR Asset Management.

• “Even if there is no further escalation in Ukraine, the main consequence is still going to be higher inflation.” Wall Street’s benchmark S&P 500 was down 0.6 per cent in the late New York morning, having moved between gains and losses.

• The technology-focused Nasdaq Composite fell 1 per cent. The Stoxx Europe 600 share gauge slipped as much as 1.9 per cent, before recovering to add 0.1 per cent.

• Volatility indices showed traders expected equity markets to continue to swing on headlines concerning Ukraine. The Vix gauge of expected volatility on the S&P 500 traded at 29.4, above its long-run average of about 20. Its European equivalent, the VStoxx, sat at about 33.

SOURCE: Financial Times