top of page

END OF JANUARY: A NEW WEEK OF ANOTHER UNCERTAIN YEAR?

2022


2022 was supposed to be the year where uncertainty would fall after two years of recession and lockdowns since 2020.


UKRAINE


Unfortunately, the Ukraine crisis and the Geo-Political tension between NATO and Russia have marked January as a month of expectation for what will happen during mid-February, or during the rest of the year.



PUTIN


According to The Guardian, "Many of the heavy weapons stationed near Ukraine arrived in spring 2021 when Russia put an estimated 110,000 troops with tanks and other heavy weaponry near the border. Some, but not all, of Russia’s troops to base in May after Putin secured a summit with Joe Biden." (...) "The thinking in Ukraine as of late January was that a focused attack in the east was the most likely scenario. On 21 January Ukrainian military intelligence said that since the beginning of the month Moscow had supplied separatists in eastern Ukraine with additional tanks, self-propelled artillery, mortars, and more than 7,000 tons of fuel."


THE MARKETS


While this situation keeps evolving, the global markets are showing a January that closes the Dow Jones Index with the following picture:

The markets expect the month just ends, and the situation in Ukraine gets calm in order for this index to go back to the trend of last year when it recovered from the crash of 2020 and also came back to its long-term trend:


DOW JONES, 5 YEARS

The question is whether during 2022 and under the Ukrainian and COVID19 twin crises, some of the top performers of 2021 will keep supporting the recovery of Dow Jones:


WINNERS AND LOSERS


The attention and care were sent to homes, technology, heritage, energy, systems, health, finance, pills, hardware, and fast food in the USA. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a price-weighted measurement stock market index of 30 prominent companies listed on stock exchanges in the United States.


THE USA VS RUSIA GAME


If the USA engages in the Russian and European Agenda during 2022, the priorities may change. Just remember that by the time the First World War broke out, the Second Industrial Revolution had greatly increased the industrial output in Western Europe and USA. These countries’ consumption of industrial fuel and raw materials (coal, oil, wood, ore, cotton, wool, leather, etc.) was increasing, and they imported these goods from all over the world.


PRICES AND OIL


Some of those products have behaved historically in the following way:


Global annual production of major biomass types in agriculture, forestry, and fossils

The fossil resources are given on a biomass equivalent basis (be) in order to facilitate a comparison with the different biomass types (conversion based on 1 ton oil equivalent ¼ 42 GJ; 1 ton be ¼ 18 GJ). 'Wood fuels' (FAO data) does not include all biomass uses for energy. For example, the FAO 'Wood fuels' data for the year 2000 corresponds to about 15 EJ, while the global biomass use for energy is estimated at about 35-55 EJ/ year. Source: Based on Berndes (2006).



OIL: OVER 80


This explains why the oil price is growing again as you can see in the following chart of West Texas Intermediate (WTI or NYMEX) crude oil prices per barrel (see the series back to 1946):

The price of oil shown is WTI adjusted for inflation using the headline CPI and is shown by default on a logarithmic scale. The current month of January has taken the price around 80 USD per barrel, updated on an hourly basis with today's latest value. The price of WTI crude oil as of January 28, 2022, reached $86.82 per barrel, a level not seen since September 2018 and November 2014, a year when it had almost a decade of prices over that level (since July 2005).


"Oil is set for closing its strongest January in Decades" (Bloomberg, Jan 31st, 2022)

INFLATION AND INTEREST RATES


With oil, general prices will continue growing so, interest rates will continue to increase:


We should add to these expectations the effect of what Russia is doing and we will see the year 2022 with higher oil prices, more inflation, growing interest rates, and higher cost of financing.


It should be remembered that Russia is the 2nd largest beneficiary of this price situation in oil markets, after Saudi Arabia.

NATO: THE VOICE TO FOLLOW


As of today, Julianne Smith USA Ambassador to NATO has mentioned that Russia is not de-escalating the situation so, NY Crude is reaching 88.08 and January is closing the best January for Oil in 30 years.


2022 has just started, and February will be a month that will call our attention. NATO voice is one for paying extreme attention nowadays.



39 visualizaciones0 comentarios

Comentarios


Política
Cultura
Economía
Sociedad
Ambiente
bottom of page