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Russia and India will switch to a new oil trade business model

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crude oil trade time

India keeps buying Russian oil in large quantities and carries on the oil trade business. However, it seems that by the end of the year it will have to adapt to the new trading system – through small independent traders, which will save Indian business from the pressure of the U.S. and the EU.

The probability that India will expand the channels to import Russian oil by involving small foreign traders in the process is quite high. Firstly, Indian companies will not have to wait for approval of long-term contracts with Russian suppliers. Secondly, India will be able to remove its own large companies from possible pressure. 

Russia will win in any case, because there will be a steady buyer for its oil, and the absence of economic stiffness with Western sanctions will make it possible to increase exports. Now the oil trade chart is extremely unstable, so it is important for traders to keep abreast of all developments. 

What oil trade brokers need to know: the time for small traders is coming

The Economic Times recently reported that India’s biggest oil refiners are considering involving small foreign firms in supplying discounted oil from Russia which “was abandoned by the Western importers”. At the moment in the turnover of Russian hydrocarbons are involved such new players as Wellbred, Manfort Capital Energy, and others, who filled the niche of suppliers after the departure of big traders. The edition stressed that Indian oil refiners are ready to take risks, as the new companies guarantee cheap raw material supplies to India. 

India could switch to working with small traders to cover current needs. If we are talking about long-term contracts, then it is more reliable for the state to enter into an agreement with a supplier directly. But there is a probability that Russian oil producers do not currently have free volumes to guarantee their delivery to the Indian market. Therefore, it is easier for India to buy individual batches with the help of traders. Now is not the best time for crude oil trading, so market participants have to take such steps. 

When Indian companies started to actively buy crude oil in Russia and make new contracts with Russian companies, they started to come under pressure. The U.S. indirectly urged the Indian government not to let Russia bypass sanctions. Although U.S. rhetoric has changed somewhat recently, the risks for large Indian businesses remain. 

Crude oil trade today: Buying volumes may even rise

It makes sense for both Russia and India to look for options for crude oil trade today that would be safer than the usual models involving using dollar financial infrastructure and its variations. Western insurers, freight and so on. 

There are large companies in India that are under the scrutiny of the Western public, the media. It is better for these big players to step back somewhat so that all transactions with Russia are handled by second-tier companies. The same thing is happening in China: there are first-tier companies; they want to stay in the market of Western countries. But there is a mass of companies, maybe even related to the first-tier business, that actively interact with Russia. 

The transition to trading through small traders may require adaptation, but on the whole, this scheme is working. This is confirmed by the growth in oil supplies from Russia to India to almost one million barrels per day. 

Depending on what happens next, India may also increase its oil purchases. Compared to the June peaks, supply has slightly decreased. There will be a lot of Russian oil on the Indian market, and the new trading mechanisms will soon replace the old ones. At the same time, the U.S. will no longer be able to influence the mentioned second-tier companies from India.



Commodities

Copper price chart fluctuates at previous closing levels

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Copper price chart

Copper prices chart are fluctuating slightly near the level of the previous close as investors estimate a lot of factors, trading data shows.

September futures on copper on the Comex exchange are getting cheaper by a symbolic 0.01%, to $ 3.5515 a pound.

On the London Metal Exchange (LME) in previous trading, the cost of a ton of copper with delivery in three months increased by 1.85% to $7,870.5; aluminum — by 0.54%, to $2,416. Zinc — by 1.1%, to $3,488.5.

Quotes in the morning do not show any pronounced dynamics for a lot of reasons. For example, the price of copper is affected by the tense situation between the U.S. and China, the largest consumer of this type of industrial metal.

Also, the price dynamics are influenced by macro statistics — exports from China in July jumped by 18% year-on-year, while the forecast growth was only 15%, which, in turn, cut some concerns about the demand for metals in its largest market.

At the same time, investors continue to fear a recessionary economy. Expectations of a further increase in the discount rate by the U.S. Federal Reserve System after the release of data from the labor market in the country have increased fears.

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Commodities

Natural gas price in Europe per 1,000 m3 hits $2,100 on the exchange

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Natural gas price europe per m3

Natural gas price Europe per 1,000m3: September gas futures contracts (benchmark TTF) were trading at $2,100 per 1,000m3 on Monday, gaining some 1.6% against Friday’s settlement price in the first hour of trading, London’s ICE exchange data showed.

So far, the current price minimum is $2,056.7 (-0.5% compared to Friday’s settlement price of $2,066.5). The maximum is $2,100 per 1,000m3 (+1.6%).

Last year the European market faced a gas collapse. Experts attributed the collapse to limited supply from major suppliers, low occupancy rates of underground gas storage facilities in Europe, and high demand for liquefied natural gas in Asia.

Right now, Europe continues to be under pressure due to continued supply strains from Russia. Russian gas exports have fallen since the outbreak of the war in Ukraine: shipments via Nord Stream and the Ukrainian gas transportation system have dropped significantly, and the Yamal-Europe pipeline has stopped altogether.

The average monthly settlement price of the nearest gas futures on the ICE increased sharply, by almost 50%, from $1,180 per 1,000m3 in June to about $1,805 in July, while in the middle of summer last year it did not exceed $500. In the last days of July gas quotations reached $2,400 per 1,000m3 for the first time in four months. Such steadily high prices have not been seen in the entire history of European gas hubs since 1996.

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Commodities

Price of gold falls on expectations of further US Federal Reserve rate hike

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price of gold falls

Price of gold falls: the price of the precious metal on Monday morning slightly decreased on the prospects of further interest rate hikes by the U.S. Federal Reserve, according to trading data.

The December gold futures price on the New York Comex Exchange is down $2.75, or 0.15%, to $1,788.7 a troy ounce. September silver futures went up 0.24% to $19.89 an ounce.

The precious metals market showed a negative trend on Monday morning, fueled by expectations of further interest rate hikes by the U.S. Federal Reserve after the release of the country’s labor market data.

Thus, the unemployment rate in July fell to 3.5% from the June level of 3.6%, while the number of the employed in non-farm industries increased by 528,000. Analysts had expected the figure to remain at June’s level. The increase in nonfarm payrolls was forecast at 250,000.

“Support from geopolitical tensions “was countered by the resilience of the U.S. dollar after the release of a credible U.S. jobs report and hawkish comments from Fed officials,” Ravindra Rao, vice president of commodities at Kotak Securities, told Bloomberg news agency.

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