Energy commodities and currencies: what to expect in 2024?

Raw materials

Posted by MoneyController on 22.12.2023

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The prices of certain energy commodities and currencies may be more correlated than is generally believed. In this regard, it is worth taking a look at some considerations made by Money.it in conjunction with investment broker XTB.

Why has the price of oil gone up?

The price of oil has risen again: Wti is currently trading at around $74 per barrel, while Brent has surpassed $80. Money.it's analysis, carried out in conjunction with investment broker XTB, suggests that the rise in prices is mainly due to the weakness of the dollar (after the Federal Reserve hinted at interest rate cuts in 2024).

Tension in the Red Sea and the price of gas

The dynamics of the oil price also seem to be influenced by the tensions in the Red Sea (rocket launches by the Houthi group from Yemen, some write, could even lead to war). The tensions in the Red Sea also seem to be affecting the price of gas, which rose by almost 3% in a few hours to reach 33.5 euros per megawatt hour. According to Ansa, the price of natural gas is still much lower than at the beginning of the year (-56%).

How important is the production cut decided by Opec?

The production cut agreed by Opec+ appears to be less important because supply is being offset by oil production elsewhere, particularly in the US. In addition, Angola, an Opec member, has decided to leave the organisation in order to avoid having to comply with the production cuts.

Dollar Weak Against the Euro and Sterling

Once again in collaboration with XTB, Money.it has analysed the currency dynamics between the Dollar and the Euro, as well as the Pound. This relationship is mainly influenced by central bank announcements, the Federal Reserve on the one hand, and the European Central Bank and the Bank of England on the other. Since Washington, unlike Frankfurt and London, has announced interest rate cuts (barring unforeseen circumstances), the markets are starting to price the dollar as weaker.

See also

Palladium prices plunge, platinum prices fall, gold and silver prices rise

Gold and oil prices, what changes with the war in Israel

Why are rare earth prices rising so fast?

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