Crude oil futures (April delivery) rallied more than a dollar throughout the European morning session, from daily lows at 103.75 to highs at 104.85. The current highs represent the highest levels since September last year, as a number of fundamental catalysts support high-level demand.
The first of these catalysts is the rising tension in eastern Europe concerning Ukraine. In response to Russian troops moving into the Crimean region over the weekend, Ukraine has ordered a full military mobilization of its 150,000+ troops towards the peninsula. British Foreign Secretary William Hague has described the situation as the “biggest crisis to face Europe of the 21st Century”, and investors and traders are flocking to risk-off assets such as the U.S. Dollar, gold and oil.
The second catalyst comes from renewed reports of extreme weather expected in the U.S. The nation’s National Weather Service reported that it expects sub-zero temperatures to grip much of northeastern and central U.S. until at least mid-March, with a high likelihood of the weather holding through to the end of the month.
The price of natural gas futures (April delivery) is mirroring that of crude oil, up 1.78% for the day at 4.688 per million British thermal units (Mmbtu), again as a result of the situation in Ukraine and the potential for month-long sub-zero temperatures across the U.S.
Elsewhere, the precious metals have benefited from investors’ risk aversion, with gold futures (April delivery) up 2.05% for the day to 1,348.80, their highest price since late October 2013. Silver futures (May delivery) have dipped slightly from last week’s five month highs, yet are still up 1.23% for the day at 21.508.
The U.S. Institute of Supply Management (ISM) will release its purchasing managers’ index (PMI) results during the European afternoon session, with a better than expected result likely to support the bullish momentum in the aforementioned commodities.
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