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Oil prices surge to $110 a barrel as Russia batters Ukraine – Press Telegram

By STAN CHOE

NEW YORK (AP) – Oil prices continued to rise on Wednesday to above $ 110 a barrel as Russia’s war against Ukraine continues, but stocks and other markets showed less fear than a day earlier.

The S&P 500 was 0.9% higher in the initial trading, while Treasury yields rose to recover some of its strong losses last week. Gold has retreated and a measure of nervousness among Wall Street stock investors has remained relatively stable after a sharp change in recent days.

Markets have been spinning wildly as investors try, sometimes blindly, to assess the impact that two major forces will eventually have. More recently, the invasion of Ukraine by Russia has caused prices for oil and other commodities to skyrocket in which the region is a major producer. In addition, there are concerns about the forthcoming rate hikes in the Federal Reserve and other central banks around the world that will affect the economy and inflation.

Fed Chairman Jerome Powell told Congress Wednesday that his central bank is ready to raise rates this month, which would be the first increase since 2018. But he also said the attack on Ukraine may have clouded conditions, with their impact on the economy. The U.S. economy is “very uncertain.”

The Fed is balancing a fluid rope in which interest rates need to rise enough to curb higher inflation for generations, but not so much as to push the economy into a recession. Meanwhile, higher interest rates tend to put downward pressure on equities and most other investments.

The 10-year Treasury yield jumped to 1.79% from 1.72% on Tuesday afternoon, while the two-year Treasury jumped even further to 1.43% from 1.31%. Yields, however, remain well below where they were before the Russian invasion. The 10-year yield was above 2% last month, before falling as investors engaged in investments considered safer among war concerns.

The price of US oil jumped another 6% to $ 109.73 a barrel, and rose to $ 112.51 in the morning to reach its highest level since 2014. Brent crude, the international standard, rose nearly 7 percent. % up to $ 112.08 a barrel.

Rising oil prices are likely to lead to inflation only higher, which means the threat is rising for something investors haven’t seen in a long time: an economy that is stagnating in the face of high inflation, something called “stagflation”.

“The conspiracy of geopolitical uncertainty and stagflation-type impulses is a brutal shock,” Tan Boon Heng of Mizuho Bank said in a report.

The price of oil has risen despite the agreement of the United States and other major governments in the International Energy Agency to release 60 million barrels of strategic reserves to increase supplies.

“Markets have rejected the idea that 60 million barrels of strategic reserves released will be a consequence of the risks of Russian supplies being jeopardized,” Tan de Mizuho said. “Russia is pumping more than that in just six days.”

A more shocking announcement may come later on Wednesday, as leaders of OPEC and other major oil-producing countries decide whether to increase their own production by 400,000 barrels a day in April.

The Dow Jones Industrial Average was 207 points higher, or 0.6%, at 33,502, at 9:40 a.m. Eastern Time. The Nasdaq compound was 0.3% higher.

Stock markets around the world have been mixed. France’s CAC 40 rose 0.8%, Germany’s DAX barely changed and Japan’s Nikkei 225 fell 1.7%.

Russia’s central bank said trading on the Moscow Stock Exchange would remain closed on Wednesday for a third day, although trading in coins and precious metals would resume for the first time this week.

In the last hours of Tuesday, President Joe Biden announced that he was joining the US allies to close the country’s airspace to Russian planes, the latest in a set of sanctions to isolate Russia.

But Biden also said in his annual State of the Union address that he would try to cushion Americans against the impact of higher oil prices. “I will use all the tools at our disposal to protect American businesses and consumers,” Biden said.

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AP business writer Joe McDonald contributed.

Oil prices surge to $110 a barrel as Russia batters Ukraine – Press Telegram Source link Oil prices surge to $110 a barrel as Russia batters Ukraine – Press Telegram

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