Oil prices have plummeted, and global stocks have risen, on hopes of increased output, which could offset some of the supply disruptions caused by sanctions on Russian output.
Brent crude fell as much as 17%, or $22, to just under $106 per barrel, after surging to a 14-year high of $139 earlier this week after the sanctions were first proposed.
The slide was attributed to the United Arab Emirates, an OPEC member, saying it would support increased output, as well as reports of similar remarks by Iraq.
Wholesale gas prices have also fallen, with the UK price per therm for wholesale delivery falling 30% to 342p, down from the all-time high of 670p just two days ago.
Gas prices have been the main cause of Britain’s cost-of-living crisis, but despite the recent drop, they remain at levels that prompted a recent sharp increase in the energy price cap and resulted in the bankruptcy of a number of energy suppliers.
A drop in the price of oil could, at least in the short term, improve the outlook for motorists, as the latest daily figures show the cost of gasoline reaching new all-time highs.
The drop also aided stock market investors, who had been concerned about the impact of an inflation shock caused by the Ukraine war, as well as the subsequent rise in the price of oil and other commodities ranging from wheat to nickel.
On Wednesday, traders were piling back into previously sold-off stocks.
The FTSE 100 in London was up 3.25 percent, or more than 200 points, adding approximately £60 billion to the value of its constituent companies.
Market observers said the mood was also influenced by “buy the dip” sentiment, or what some refer to as a “dead cat bounce.”
The rally was still insufficient to compensate for recent steep sell-offs, and it was not even the largest of the current crisis, following a 3.92 percent gain for the FTSE 100 on February 25.
OANDA’s senior market analyst, Craig Erlam, stated: “Perhaps what we’re witnessing is a hopeful rally rather than one founded on solid ground.
“I’d be surprised if it lasts for an extended period of time unless we see actual progress toward a cease-fire and Russian withdrawal.”
In other news, Germany’s Dax gained 7.9 percent on Wednesday, the largest one-day gain since the volatile period in the early stages of the pandemic two years ago.
Due to Germany’s exposure to Russian energy supplies, the Dax has suffered the most among European stock indices, and it closed on Tuesday in so-called “bear market” territory, more than 20% below its most recent peak.
On Wall Street, the S&P 500 was up more than 2%, and the tech-heavy Nasdaq was up more than 3%.
Source: Skynews
