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Oil prices are declining as China’s blockade raises demand concerns

Oil prices fell on Monday as Ukraine and Russia prepared for further peace talks and the blockade of the new coronavirus in China raised the prospect of easing global energy demand.

Brent crude, a global benchmark, fell 5.5% after Ukraine’s President Volodymyr Zelensky declared neutrality and promised to abandon plans to join NATO if Russia withdrew its troops. It’s now $ 114 a barrel.

US West Texas intermediate crude oil fell 5.8% to $ 107, analysts say Chinese authorities have cut connections between Shanghai and other countries to contain a record coronavirus outbreak.

“We are concerned about weak demand from China, which automatically speaks to us about weak global oil demand,” said Christian Keller, head of economic research at Barclays.

The fall in crude oil prices helped facilitate the procurement of US Treasuries that were sold out early in the session, as traders bet on aggressively raising interest rates to tackle high inflation.

High energy costs are a key factor in rising global consumer prices, curbing bond demand by reducing the attractiveness of fixed interest rates offered by bonds such as government bonds. Brent is about 15% above the February closing price. 23, the eve of Russia’s invasion of Ukraine.

Yields on 2-year government bonds, which are inversely proportional to price, rose 0.11 percentage points to over 2.4 percent in European transactions, up more than 1.6 percentage points from the end of last year.

Since then, yields have dropped to 0.04 percentage points in New York trading. The Treasury yield for 10 years fell 0.04 percentage points to 2.45 percent, surpassing 2.5 percent in previous transactions.

Despite volatile trading in the Treasury, the US dollar remained strong against other major currencies, reflecting continued bets on monetary tightening policies.

Luca Paolini, Chief Strategist of Picte Asset Management, said:

The Treasury yield for the first five years on Monday was above the 30-year yield for the first time since 2006, but then slightly below the long-term securities.

The reversal of the so-called yield curve of this nature reflects concerns that the Fed’s attempts to combat inflation could curb growth over time and even cause a recession.

The dollar rose 1.7% against the Japanese yen to buy 124.2 yen. This was due to the Bank of Japan taking steps to maintain its monetary easing policy and the Fed raising interest rates, with Stirling down 0.8% against the dollar to $ 1.308.

In equities, Wall Street’s S & P 500 stock index fell 0.4% and the technology-focused Nasdaq Composite index fell 0.1%. The Stoxx 600 stock index in Europe rose 0.3%. Asian stock exchanges were mixed and Japan’s Nikkei 225 fell 0.7%. Hansen in Hong Kong rose 1.3%.

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