The just passed first week of February brought significant increases in energy commodity prices. Natural gas futures rallied more than 18 percent this week, the best performance among popular markets. Crude oil also rose significantly.
Oil prices for both WTI crude and Brent crude, approaching their highest levels in a year. By the morning of Friday, February 5, the price of a barrel of WTI crude had surpassed $56.50, heading for its biggest weekly increase since October. Brent crude oil rose above $59.
On a weekly basis, the price of WTI is up more than 9 percent, Brent crude is up more than 8 percent, U.S. gasoline prices are up more than 7 percent, translating into an increase in inflation expectations to 2.11 percent, the highest since late 2018.
The oil increases may be tied to hopes of a recovery in global oil demand as COVID-19 infections, hospitalizations and deaths begin to decline globally.
New vaccine, stock markets gain, franc and euro lose
Johnson & Johnson was expected to ask U.S. regulators on Thursday for approval for the world's first single-dose vaccine against the virus, which seemed to improve market sentiment. Investors were also pleased by reports that China just before the Lunar New Year holiday reported the lowest number of new cases of the virus in more than a month.
The passing week also saw a return of optimism to the stock markets. The Nasdaq 100 seems to have gained over 5 per cent in the past few days, while the Euro Stoxx 50 has seen similar gains and the German Dax and American S&P 500 have risen by 4.8 per cent.
On the currency market, the Swiss franc and the euro seem to have lost the most this week - by about 1.3 % each. The US dollar may recover in anticipation of US labour market data.
US jobs increase, but a drop in the ocean of needs
Nonfarm payrolls in the US are expected by consensus to show a potential increase in employment by 50 thousand in January 2021. Recall that there was a decline in jobs in December. The January forecast indicates very little growth as the U.S. economy will still be about 10 million jobs short of its February 2020 employment peak.
President Joe Biden will speak today on a $1.9 trillion aid plan for the U.S. economy that includes unemployment benefits and direct payments to Americans. The package has not yet been approved and there are doubts that Congress will pass it.
The Congressional Budget Office estimates that the number of employed Americans will not return to pre-pandemic levels until 2024 because the pandemic is far from contained, still posing many challenges to the labor market.
The NFP will be published at 2:30 p.m. and Joe Biden's speech is scheduled for 5:45 p.m. CET.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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