Oil prices fall from 14-year highs, commodities retreat ahead of US Federal Reserve meeting

After downward pressure on oil prices started last week, both West Texas Intermediate and Brent crude fell to under $100 on Tuesday, amid ceasefire negotiations between Russia and Ukraine, and thanks to an easing of supply concerns.

In addition, the latest COVID-19 surge in China has led to lockdowns for millions and could further lessen demand for energy supplies as spring arrives in the northern hemisphere.

All this follows a 14-year high of almost $130 per barrel reached at the beginning of March.

At US market close, oil futures fell as West Texas Intermediate futures contract lost $6.57, or 6.4%, to settle at $96.44 a barrel on the New York Mercantile Exchange. May Brent crude lost $6.99, or 6.5%, to settle at $99.91 a barrel on ICE Futures Europe.

In the energy sector, shares of Exxon Mobil were down 5.7%, while ConocoPhillips fell 1.55%.

A 10 March Canadian poll found that 71% of Americans want US President Joe Biden to sign an executive order to green light the stalled Keystone XL pipeline to transport Canadian bitumen to refineries in Texas, while 64% of pollers believe Canada could fill the void left by the US ban on Russian oil.

Gas

US natural gas production is expected to climb thanks to more exports headed to Europe, but analysts and industry insiders are already capping prices well below this winter’s high.

April contracts fell on Tuesday afternoon by more than 1%, to $4.60 per million British thermal units (MMBtu) from its opening at $4.68, fading from the heating season’s high of $6.70 MMBtu.

Natural gas spot prices dropped $0.56 to $4.25 MMBtu ahead of the forecast warm-up.

Gold

Gold fell for the third day to a two-week low as commodities retreated ahead of the US Federal Reserve meeting on Wednesday afternoon, which is expected to increase interest rates.

Gold futures were down on Tuesday as April gold shed $31.10, or 1.6%, to settle at $1,929.70 an ounce.

Uranium

Uranium prices have been surging in recent days, hitting their highest level since the Fukushima nuclear disaster in 2011. Increasing Western sanctions on Russia have also aggravated the market, pushing prices higher.

Russia is a significant exporter of enriched uranium, with the US consuming approximately 16.5% of Russia’s output. Investors worry that supplies may be delayed or cut off as sanctions tighten.

Ukraine also produces large quantities of uranium, outputting approximately 801 tonnes in 2019.

Wheat

India is considering its agricultural options with plans to establish itself as a major exporter of top-grade wheat on par with Ukraine, which grows over 10% of the world’s production. Importers are currently hurrying to secure supplies following Russia’s invasion.

Futures in Chicago SRW Wheat jumped 5.56% to $11.57 a bushel on Tuesday.