Explosive rise in oil prices. Closer to $ 100 a barrel

Futures contracts for WTI oil today rose above USD 86 a barrel. The series of hikes extended to four consecutive sessions, with prices hitting their highest levels in seven years. She could have contributed to this an explosion of a key pipeline from Iraq to Turkey.

Due to the outbreak, the supply of raw materials on the market, which was already affected by decreasing reserves, decreased. Stocks declined due to downtime and production shortages in OPEC + member countries, but also due to increasing geopolitical tensions. These events coincided with the recovery of fuel demand.

OPEC expects oil demand to grow. Rising energy and commodity prices, however, pose a challenge to consumer countries and central banks, which are trying to prevent inflation while supporting global growth. In the US, this prompted the government to carefully monitor prices and negotiate with OPEC + countries if needed.

European Central Bank closer to a rate hike?

The yield on 10-year German bonds rose above 0%. for the first time since May 2019. High inflation in the euro area may have raised expectations for faster monetary policy tightening by European Central Bank this year.

Markets took into account the interest rate hike by 10 basis points by the ECB in September and assume a second rate hike by December this year. The euro area central bank has already announced plans to end emergency bond purchases in March, thanks to an economy recovering from the COVID-19 pandemic.

In turn, the American Federal Reserve is expected to raise interest rates already in March and three more times by the end of the year, according to the valuation of futures contracts on the federal funds rate.

Thus, the era of negative yields in the euro area could become history as well as the era of unprecedented support from central banks.