Commodity prices diverge on Ukraine, weather factors

Commodity markets traded mixed this week as dealers reacted to a renewed escalation of tensions over the Russia-Ukraine crisis as well as weather factors. Many markets began the week on Tuesday following the Easter break that had cut short also the previous week’s trading. OIL: Crude future diverged as traders weighed increased worries over the Russia-Ukraine crisis against data showing US crude stockpiles at an all-time high. “It seems that Russia’s downgrade from the credit rating S&P has dominated the equity and commodity markets on Friday, prompting investors to lock in recent gains in the oil market,” Myrto Sokou, senior research analyst at Sucden brokers, said. Standard and Poor’s downgraded its rating of Russia’s ability to repay debt as alarm grew over the effects of the Ukraine crisis on the economy amid increased capital flight and slumping growth. Russia’s central bank also hiked interest rates by half a percentage point in a move aimed at curbing inflation which could also help limit capital flight and pressures on the ruble. Ukraine, a major conduit for Russian natural gas exports to Western Europe, is monitored closely by investors who are concerned also that a full-scale armed conflict will disrupt supplies and in turn send energy prices soaring. “Renewed tensions over Ukraine between Russia and the West have triggered fresh worries about possible oil supplies issues in the region,” Sokou added. The Soufan Group, a US-based consultancy that provides strategic security intelligence services to governments and multinational firms, said Russia accounts for 34 percent of natural gas supplies to the European Union. Away from the Eastern Europe strains, the US Department of Energy on Wednesday reported commercial crude oil stocks rose 3.5 million barrels to 397.7 million barrels for the week ended April 18. That was the highest level of inventories since the DoE began releasing weekly data in 1982 and the highest level since 1931, according to monthly data kept by the agency, according to AFP.