Daily summary: Energy prices rally as West considers cutting off Russian oil

• US will suspend trade ties with Russia, including energy imports
• EU seek only a cautious 'phase out' from Russian energy
• Oil price highest  since 2008
• Gold briefly jumped above $2000 for the first time since Aug 2020

European indices finished today's session sharply lower, with DAX 30 falling almost 2% to a 16-month low of 12,850 amid lingering fears higher energy prices stemming from the Russia-Ukraine conflict would boost inflation and hit economic growth. EU leaders decided to phase out dependency on Russian gas, oil and coal, however no ban on energy commodities imports from Russia was announced so far, mainly due to Germany objections. It is worth to remember that revenues from oil and gas sectors accounted for 45% of Russia’s federal budget in January. Therefore it seems that cutting Putin off from his main source of financing may be the quickest way to end the war, especially that diplomatic solutions still did not have any impact on the Kremlin's main tenant. Third round of negotiation between Ukraine and Russian officials did not bring any major breakthroughs, however both sides are willing to continue talks. Traders from Europe will focus tomorrow on Eurozone employment and GDP data, before the ECB monetary policy meeting and macroeconomic forecasts on Thursday.

Downbeat moods prevail on Wall Street where Nasdaq fell 2.4% as investors continued to assess stagflation risks to the global economy. The US House and Senate have announced an agreement on legislation to suspend normal trade relations with Russia and Belarus. That includes banning Russian energy imports as the US is less reliant on Russian oil. Investors try to figure out how the ongoing tensions will affect the central bank's next rate decision. Federal Reserve chair Jerome Powell pointed to a 25 basis point rate hike at the March policy meeting but said the central bank is prepared to move more aggressively later if inflation does not abate as expected. 

Oil prices launched this week sharply higher. WTI crude futures jumped briefly above $130 per barrel, the highest since 2008, before paring gains to around $117 per barrel amid talks regarding embargo of Russian oil in response to the Ukraine invasion. Meanwhile, negotiations regarding the Iran nuclear deal stalled following Russia’s demand for written US guarantees that sanctions on Russia would not hurt its trade with Iran. China also reportedly made similar demands regarding its trade with Iran, complicating efforts to seal a nuclear deal.

The escalation of Russia's aggression in Ukraine is supporting the prices of precious metals. Gold continues to rise after the breakout from the triangle formation. Source: xStation5