LONDON: European stocks mostly slid, oil briefly flirted with $120 per barrel before pulling lower and natural gas fired its way to another record peak on Thursday as war raged in Ukraine.

The euro sank to the lowest level against the pound since mid-2016, as the bloody unrest triggers concerns over the eurozone’s economic recovery from the coronavirus pandemic.

In commodities trading, Brent North Sea crude reached $119.84 per barrel, the highest level since early 2012, while WTI touched $116.57, last seen in 2008 -- though both gave up ground mid-session as their rally faded.

Europe’s reference Dutch TTF gas price earlier surged to a record 199.99 euros per megawatt hour, before heading back under 170 euros in mid-afternoon trade.

Russia is a major oil and gas producer.

“Supply side pressures remain high, as the conflict in Ukraine triggers new sanctions on Russia, which could soon extend to gas and oil exports and exacerbate the tightness felt in global markets,” noted ActivTrades senior analyst Ricardo Evangelista.

“US inventories continue to decline and the Opec+ is sticking to its pre-established output levels, despite the growing demand.” Surging oil prices are playing a major role in sending global inflation to the highest levels in decades, forcing central banks to hike interest rates.

Amid the volatility, “the focus remains firmly fixated on the situation in Ukraine and nothing else matters, it seems, for the markets,” said Fawad Razaqzada, market analyst with ThinkMarkets.

“Uncertainty is weighing on risk appetite,” he added.

Federal Reserve chief Jerome Powell on Wednesday said he was in favour of a moderate pace of rate increases, with a 25-basis-point lift this month.

He warned that the “near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain”.

The comments soothed concerns that officials could announce an aggressive 50-basis-point lift.

Analysts warned of market volatility for some time as fighting in Ukraine weighed further on the ruble and is sending other commodities produced by Russia, including aluminium, to record highs.

Bloomberg’s gauge of raw materials is closing in on the biggest weekly gain since at least 1960, the financial data provider said Thursday.

The eurozone remains vulnerable to energy markets volatility because of its dependency on Russian oil and gas supplies.

“The euro area is very exposed to the events in Ukraine, particularly on the energy side given how reliant it is on Russia,” Craig Erlam, analyst at OANDA trading group, told AFP.

Published in Dawn, March 4th, 2022