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Prices of crude oil futures are extending losses this afternoon. Fears triggered by the announcement of lockdown restrictions in the Chinese city of Shanghai are weighing on the black gold, sending it 6% lower. Though, technicals are showing oversold regions, with RSI below 30. 

Gold prices (XAU/USD, +0.25%) are the highest they've been in a week, at USD1'950 per ounce, despite yields on the 10-year US Treasury Note rising to 2.37%. Typically, rising yields lead to a stronger US dollar and to a weaker USD-denominated gold as higher yields increase the “opportunity cost” of holding onto the precious metal. However, it appears that traders are continuing to buy the dip and hold on to gold for its appeal as a safe haven and as an inflation hedge as there are elevated fears that geopolitical and stagflation risks could perhaps become more significant over the near term. Meanwhile, Britain and its Western allies are examining options to prevent Russia from accessing its gold reserves. In theory, a move like that would reduce the gold supply and thus increase its potential to appreciate.

The swings in raw materials and energy prices are driving up volatility in other assets and adding to the fear in financial markets. The war has created tremendous uncertainty in the energy markets and is causing markets to react swiftly to any major news. Yesterday, Russia said it will demand that "unfriendly" countries pay for natural gas in rubles, causing European gas futures to jump more than 20%. Traders sold off European stocks in anticipation that higher energy prices will pressure the economy. This morning, traders are hopeful about the potential for a new oil supply from Iran if a deal is reached. US officials said late on Wednesday that progress had been made in Iran nuclear talks but issues remain. While the initial shock of higher oil prices shook stock markets by surprise, it could be that stocks are digesting current prices, and are becoming less vulnerable to large daily moves in energy costs. 

Prices of oil futures are gaining more than 4.5% so far today amid increasing concerns over the crisis in Ukraine and recent strikes on Saudi's oil facilities. As Russia's army is encircling the capital and intensifying military operations, Europe and the US are getting ready to impose additional sanctions, possibly a ban on Russian oil imports, a situation that kills all hopes of peace talks. In addition, this morning, Saudi Arabia, the world's second-largest export of oil, called on the international community to do more to counter Houthi strikes on the kingdom, warning that they could disrupt global energy supplies. It remains to be seen whether the Europeans will take the plunge, but in the meantime, as the situation worsens, oil prices see a lot of upward risks. 

Oil surges 7% with Crude Oil WTI reaching USD110.5 per barrel, a level not seen since 2013, just ahead of the OPEC meeting. Behind the move, markets judge the release of global crude by members of IEA, which include the US and Japan, insufficient, as the 60 million barrels is less than a day's global demand. The move fails to calm fears about supply disruptions from Russia's invasion of Ukraine. Persistent high energy prices are expected to put pressure on the consumer, slowing down the global economy. Later today there will be US Crude Oil inventory data, as well as Fed Chair Powell testifying.