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A new historical record for gas prices in Europe has been set. On Friday, March 4, prices for April futures on the TTF hub reached $2,391 per thousand cubic meters against $1,724 the previous day.

Brent oil also set a new record, rising above €115 for the first time since June 2014, to €115.7 per barrel.

Elon Musk, the head of Tesla, called for an increase in oil and gas production to compensate for losses from Russian exports. The businessman noted that “green” energy solutions do not currently allow this.

The cost of energy resources continues to grow on the fears of investors about interruptions in the supply of Russian raw materials. In addition, gas consumption in the EU is growing against the backdrop of lower temperatures, as well as a decrease in electricity generation through wind generation.

Nevertheless, according to Gazprom, now the transit of gas through the territory of Ukraine through the Yamal-Europe gas pipeline is kept at the maximum of the company’s contractual obligations.

Andrey Syrchin, CEO of CRESCO Capital commented on the situation:

“In general, the global oil and gas industry is on the rise, but due to the impending recession, we expect consumption problems and supply disruptions. Now we would recommend to refrain from investing in the industry. Although prices are near historical highs, most of the profits are taken by taxes and payments. So companies are not always the beneficiaries of high prices!”

New all-time highs set

There are supply problems in the world commodity market caused by the aggravation of the Russian-Ukrainian conflict. Against this background, the cost of many goods has increased markedly.

For the first time since 2013, Brent oil prices exceeded $118 per barrel: on March 3, 2022, May futures traded at $118.02. The cost of WTI exceeded $114 ($114.59). Demand for the Urals, on the contrary, fell significantly due to the sanctions imposed against Russia, and its discount to Brent reached a record high ($15 per barrel).

Oil prices are affected by fears of new sanctions and, as a result, even greater supply disruptions and shortages, as well as the results of yesterday’s OPEC + meeting, where it was decided to continue increasing production by 400,000 barrels per day.

Gas prices are also rising. On Wednesday, a historical record was set – the cost per 1,000 cubic meters was $2,226. At the opening of today’s trading, gas was traded at $2065.9.

The growth of these stock quotes was provoked primarily by soaring oil, as well as Western sanctions against the Russian Federation. In general, according to market data, gas has grown by 59.4%.

The historical maximum was updated by the cost of aluminium. The price per ton rose above $3600 to $3643. Nickel has risen in price to a maximum since 2011 – $26,788.5 per ton. Metal prices are mainly rising on fears of accelerating global inflation.

“I believe that the situation with expensive raw materials will last until the end of the special operation, as well as until the normalization of the situation with payments in Russia. If the conflict continues to escalate, next week we will be able to see extremes in oil and other raw materials,” said Andrey Syrchin, CEO of CRESCO Capital.

This is the highest since October 2014

The cost of April futures for Brent oil on the London ICE exchange rose by 1.73%. For the first time since October 1, 2014, the price of this brand of oil exceeded $96 per barrel ($96.07).

The cost of April futures for WTI crude rose by 1.62% to $94.61 per barrel.

The increase was facilitated by a recovery in demand and a shortage of supply, as well as the geopolitical situation (in particular, the tension around relations between Russia and Ukraine affects) and rising gas prices.

According to the forecasts of the International Energy Agency, the demand for oil this year will grow to 100.6 million b/d, due to which we can expect an average cost of a barrel of Brent grade at $86.

If oil prices continue to rise and reach around $90 per barrel, Russia’s budget could receive more than $65 billion in additional revenue.

Apple and Tesla report record revenue

Apple Inc. has published a report for the first quarter of fiscal year 2022. The company’s revenue reached a record $123.9 billion, an increase of 11% compared to the same period last year. Net profit amounted to $34.6 billion (+20%). Apple traditionally attribured the largest part of it to the iPhone, increasing sales revenue by 9% to $71.6 billion.

According to preliminary estimates, in the last quarter Apple became the leader of sales worldwide. Tim Cook, CEO of the corporation, said that such high results “became possible thanks to the most innovative line of products and services in our entire history,” however, some experts associate the unprecedented revenue of the company with increased demand for goods during the New Year holidays.

Tesla Inc., the manufacturer of electric vehicles, despite the problems in the supply chains, received a record net profit of $5.52 billion by the end of 2021, which is 7.7 times higher than in the previous year. The company’s revenue amounted to $53.8 billion (+71%), and the number of cars sold amounted to 936 thousand cars (+87%).

The main task of the company for the next year will be to increase production. According to Elon Musk, it is planned to increase supplies by more than 50%. It also became known that you should not expect new car models in 2022.

Stepan Sumin, asset manager of CRESCO Capital, analyzed the statements of both companies. Learn more from the video!

Forecast on the activity of the American regulator

Today, January 26, the US Federal Reserve will present the results of its two-day meeting. According to most analysts, the regulator will leave the key rate at the current level of 0-0.25%, but its other intentions are unclear.

Earlier, the head of the Fed, Jerome Powell, said that the main task of the US Federal Reserve at the moment is to fight inflation and curtail quantitative easing and asset buyback programs. A series of rate hikes will follow.

Against the backdrop of waiting for the decisions of the Fed, the volatility of the stock markets is growing, investors have taken a wait-and-see attitude. Yesterday, the NASDAQ fell 2.28%, the Dow Jones fell 0.2%, and the S&P 500, which has lost 11% since the beginning of the year, fell 1.2%.

Meanwhile, the dollar index against world currencies rose to a maximum since January 2022, to 96.26 points (+0.4%). The ruble fell slightly against the dual-currency basket.

Although the Russian currency is now more pressured by geopolitics and inflation, the tightening of the policy of the US Federal Reserve may also become a negative factor of influence.

“We expect the US Fed to be softer in rhetoric than the market has been suggesting so far. It is almost certain that the regulator will not raise the rate today, although many have already said that a series of hikes could begin before the quantitative easing program is finally curtailed.

However, we believe that this will not happen: a difficult situation has developed on the market, US indices of small companies have already fallen by 20-30%, and the main US indices – S&P 500, Dow Jones, NASDAQ – by 15%. This is a fairly serious fall, and the Fed will be forced to be more cautious. Nevertheless, inevitably 3-4 rate hikes will occur during the year, as well as curtailing programs. Therefore, the result of today’s meeting is most likely to be neutral and rather supportive of the market, and the Fed will look more gently and delve into this story without acting too aggressively.

For the world economy, raising rates is in any case a complication of processes and a rise in the cost of money. The World Bank has already lowered expectations for economic growth this year for almost all countries, including Russia, the USA, China and the European Union for 2022, while raising expectations for the next one by 0.1-0.2%. More expensive money will slow down the global economy and its development, as well as strengthen the dollar. Accordingly, this is a negative signal for the ruble, but all these factors are already embedded in our currency, and geopolitics directly carries greater risks than economics. We expect that the current pressure on the Russian currency will decrease and we expect it to slightly strengthen in the medium term to the nearest levels of 76 rubles per dollar,” Andrey Syrchin, CEO of CRESCO Capital Ltd., commented on the situation.

Analytics from Stepan Sumin, Asset Manager at CRESCO Capital

The Russian stock market is correcting up on Tuesday after a strong sell-off caused by increased geopolitical rhetoric. The Moscow Exchange index during the morning session adds about 2%, to the area of 3300 points.

Yesterday, the Russian market witnessed another “black swan” – it collapsed, unable to withstand the pressure of geopolitics. The Moscow Exchange Index fell by 5.93% to 3235.28 points, the RTSI – by 8.11% to 1288.17 points. Among the fall leaders were VK (-11.0%), Ozon (-10.6%), Aeroflot (-9.2%), Yandex (-8.7%).

The focus was on the situation around Ukraine. The triggers for such rapid sales were the news about the plans of Western countries to evacuate some of their diplomats from Ukraine in view of the expectation of a possible, in the opinion of foreign politicians, Russian invasion of the country. In addition, the media reported that the United States is considering the transfer of troops to Eastern Europe.

This morning, stock prices are rising, but as we can see, there are no bullish divergences on the main indicators on the daily stock charts. The Moscow Exchange Index is in the bearish zone, and in order for the situation to change, it is necessary to break through the 3650-3680 mark, the nearest technical resistance is at the level of 3550.

The RTSI index feels a little more cheerful in the morning, adding 3.1% at the moment, but at the same time, strong volatility throws the index in different directions, and we see a range of 129160-134320 for the March futures on the RTSI index. By 12 am, having closed the trading gap on Monday, it is trading near its open price of 131500.

On the Western grounds there is negative sentiment on the eve of the meeting of the US Federal Reserve, although yesterday’s technical rebound in US indices showed that there are cartridges. The puncture of the 200 EMA only strengthened the feeling of an early decline in the US market.

A possible scenario in terms of technical analysis: SPX will move sideways 4240-4400, but with the slightest positive news, it can make a technical rebound to the area of 4480-4529, after which there will be a rollback back to local support zones.

We expect continued strong volatility in the markets and active speculative transactions during the day. The next two days in connection with the Fed meeting may set the tone for the markets for several weeks ahead.