As the war in Ukraine continues, concerns about the potential impact that military actions and sanctions could have on oil supply continue to drive energy prices higher. WTI and Brent crude are both up another 7.0% this morning with WTI trading up above $110.00/bbl, and the US gasoline price climbing 5.2% to trade near $3.25/gallon. OPEC+ are holding their usual monthly meetings on production this week. While the group is widely expected to continue its current production restoration program, it may come under some pressure to increase production faster or to at least present a plan in case supply is impacted further.
Inflation has been on the rise already and spiking energy prices appear to be making the problem worse, increasing pressure on central banks to take action. The Bank of Canada is meeting today with a decision and statement due at 10:00 am EDT. Governor Macklem and co are widely expected to raise the overnight rate by 0.25% to 0.50%. Considering how far central banks have fallen behind the curve, a 0.50% increase can’t be ruled out. Considering that New Zealand’s central bank recently raised its main interest rate, the war in Ukraine appears unlikely to change plans but investors should note that with inflation running so hot lately, any delay now may just exacerbate the problem and could potentially force central banks to raise rates faster later.
US index futures are up 0.4%-0.5% today on positive domestic news. ADP private sector payrolls increased by 475K in February, which beat the 388K the street was expecting. More importantly, January payrolls were revised sharply upward from -301K to +509K. Overseas, the Dax is up 0.4% while the FTSE is up 0.7%. Metals action is mixed. Gold is down 0.6% and silver is down 1.1% while copper is up 2.2% and platinum is up 1.3%.