Commodities and Cryptos: Oil higher, Gold shines, Bitcoin lower after Nuclear plant seized

Oil

Crude prices rallied after Russian troops seized control of Europe’s largest nuclear power plant in Southeastern Ukraine.  A fire at the nuclear site was extinguished and early reports were that there was no immediate indication of a rise in radiation levels.  Yesterday, hopes were growing that a third round of talks could happen and lead to a ceasefire and later that night Russia forces continued to make gains.

Oil prices has been a one-way market, but the potential return of Iranian crude supplies could provide much relief to this very tight market.  Over the weekend, IAEA chief is expected to visit Tehran and could make a breakthrough over the last roadblocks that are preventing a revival of the 2015 Iran nuclear deal.  If energy traders believe an Iran nuclear deal is imminent, whatever dip we see in crude prices might be short-lived.  Iran claims they will be able to ramp up production quickly, but the potential disruptions of Russian supplies is too big of a shock for energy markets.

Baker Hughes reported that the global oil and gas rig count rose in February by 37 to 1,669.  The US saw an increase of 35, Canada’s rigs rose by 30, while the Middle East had a decrease of two rigs and Europe saw their count decrease by nine rigs.  Despite oil prices being well over $100, rigs are not growing at a fast pace which means the energy market will be seeing higher oil prices throughout the rest of the year.

Gold

Gold prices rallied after a robust employment report was accompanied with soft wages, which will bolster the dovish Fed members’ argument to have a slower rate hiking path. Demand for safe-havens was elevated after Russians seized Europe’s largest nuclear plant in Southeastern Ukraine.  Russia’s military campaign continues to make gains and that is leading to fears they have an ambition to take control of all of Ukraine.  With both European equities and the euro in freefall, demand for safe-havens will not be easing anytime soon.  Gold has key technical resistance levels it has to break past, but the argument for the $2000 level does not seem so far fetched anymore.  The $1980 level should hold this week, but if risk aversion remains strong early next week, gold could see bullish momentum take prices towards the psychological $2000 level.

Bitcoin

Bitcoin tumbled after news broke that the Russians seized Europe’s largest nuclear plant.  Bitcoin is still mostly a risky asset, although many will argue it is also a safe-haven given the war in Ukraine.  Given the recent rebound in Bitcoin prices, a fresh bullish catalyst is needed to send prices north of the $45,000 level. Bitcoin seems poised to consolidate here, but could be subject to further downward pressure if Wall Street concerns grow that a European recession could drag down the US.

Bitcoin’s broadening formation could see selling pressure look to test the $37,000 area.

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