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LGT Navigator: Oil price continues to soar

February 2, 2022

Amid volatile stock markets, the price of oil is once again approaching last week's seven-year high. According to oil companies, demand is high and supplies are scarce. Meanwhile, oil prices for both Brent and West Texas Intermediate are just below USD 90, up +75% and +90% respectively since the start of last year. Investors are not expecting any market-moving action from today's OPEC+ meeting.

Oil on new highs

Tight global oil supply and geopolitical tensions in Eastern Europe and the Middle East have sent oil prices up about +15% this year. Last Friday, crude oil saw its highest prices since 2014, with Brent at USD 91.70 and WTI at USD 88.84.

The market does not expect OPEC+ to change course at today's meeting. The alliance of oil-exporting countries is expected to bring an additional 400'000 barrels per day into the market for March, meaning it will continue to focus on moderate production increases. This would probably result in a continuation of the tightening of supply and the upward trend in prices.

Record low unemployment rate in the euro area

The unemployment rate in the eurozone fell to 7% in January, the lowest level since records began in 1998. Tuesday's data from Germany also showed an unexpectedly sharp drop in claims for unemployment benefits. However, due to the various measures surrounding the coronavirus, these figures should be taken with a grain of salt.

Thus, the current aggregate eurozone unemployment rate beats the previous employment records set in 2008 before the financial crisis (7.3%), and in 2020 before the corona crisis (7.2%). The highest unemployment rate was recorded in 2013 at 12.2%.

Diminishing supply bottlenecks in the US economy

The US manufacturing sector exhibits a further reduction of supply-chain stress, even though there are many sick leaves due to the omicron coronavirus variant. Official production and employment numbers held up while indicators of demand, notably backlogs and orders, receded. Indicators like the Delivery Delays Index posted the lowest value since November 2020. This may be an indication that inflation of good prices may moderate in 2022 as demand and supply shift back to normal territories.


Economic Indicators February 2

MEZ Country Indicator Last period
11:00 EZ Consumer price index (year-on-year) 5.0%
13:00 USA MBA mortgage applications -7.1%
14:15 USA ADP employment change 807k


Earnings Calender February 2

Country Company Period
CH Julius Baer Annual
ES Banco Santander Annual
CH Novartis Annual
JP Sony Q3
DK Novo Nordisk Annual
USA Meta Q4


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Source: LGT Bank (Switzerland) Ltd.

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