Commodities Not That Hard Hit By Crimea Due to High Inventories

Unprecedented natural gas reserves in Europe, record global grain output and the threat of mutual economic calamity from oil sanctions are cushioning commodity prices even as the Ukraine-Russia conflict spurs a gold rally.

While U.K. gas prices, a European benchmark, rose 3.6 percent since the crisis began at the end of February, they are still the lowest for this time of year since 2010. Brent crude fell 1.3 percent. After wheat advanced 13 percent and corn 3 percent, both remain about a quarter below the peaks in 2010, the last time Russia and Ukraine curbed shipments. Gold reached a six-month high today as demand for a haven grew.

Abundant supply is limiting some price swings caused by Russia’s incursion into Crimea, where a majority in a disputed vote yesterday chose to join Russia, preliminary results show. Europe gets about a third of its gas from Russia, half of it through Ukraine, and about the same proportion of crude. Russia’s economy has slowed for three years, increasing its reliance on the export revenue. Sanction talks in Europe have focused on asset freezes and visa bans rather than energy.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.