Headlines:French election poses weekend risk for the euroJapan moves to ban Russian coal importsEU formally adopts new sanctions against Russia, includes coal import banBank of Russia brings down key rate by 300 bps to 17%Markets:USD leads, NZD lags on the dayEuropean equities higher; S&P 500 futures up 0.4%US 10-year yields up 2.5 bps to 2.679%Gold flat at $1,932.30WTI up 0.3% to $95.75Bitcoin down 0.4% to $43,350It was a quiet session for the most part but the dollar is continuing its recent good form as it firms slightly across the board.There were few notable headlines in European morning trade, with the Russian central bank moving to cut its key interest rate from 20% to 17% being arguably the highlight. That comes after the ruble has made a strong recovery in the past few weeks after a massive plunge during the beginning of the Russia-Ukraine conflict.Equities are looking to end the week on a more positive note after the gains in Wall Street yesterday. European indices are up over 1% while US futures are posting slight gains ahead of the open later. But the advance today comes after a tough week for stocks in general.Meanwhile, the bond market selloff is continuing to play out as Treasury yields climb further on the day. 2-year yield are back up above 2.50% and 10-year yields on approach to 2.70% soon enough. The latter is now approach its 200-month moving average @ 2.67% so that is a key level to be wary about.In the FX space, the dollar is seen firming with EUR/USD easing to fresh one-month lows around 1.0850-60 levels. The euro itself has some weekend risk to consider with the French presidential election on the cards on Sunday.GBP/USD is also weighed down as sellers start to take aim at the 1.3000 level. USD/JPY is looking perky as it tries to keep above 124.00 now with buyers hoping to try and retest 125.00 in the bigger picture.Elsewhere, commodity currencies aren’t faring too well either with AUD/USD down near the lows around 0.7460 and NZD/USD down 0.6% to 0.6850 levels. Both the aussie and kiwi are struggling for momentum after a bit of exhaustion following the post-RBA surge earlier in the week.

Just to give a bit of background, Japan is the world’s third-largest importer of coal and Russia is the country’s second-largest supplier. In total, Russia supplies over 10% of Japan’s coal imports.Japan prime minister Kishida says that in banning Russian coal, the country will focus on renewable energy and nuclear power to replace the lost supplies. Those aren’t things that will come overnight but it highlights the long-term planning by many countries now in diversifying away from Russian energy.Coal is obviously the easy step. Oil and gas is an entirely different ballgame but it is one that could be on the cards in the year(s) ahead.Much like the EU, Japan also relies heavily on Russian oil and gas. For some context, the city of Hiroshima imports almost half of its gas supplies from Russia and Tokyo roughly about 10%.It will take time to replace existing contracts and projects that are running at the moment but over time, one can expect more and more countries to continue to lessen their dependency on Russian energy.The question then becomes, what is the long-term outlook for Russian oil and gas? I fear it is going to be a Venezuela situation but considering Putin’s ideals, you never really know what might come next when his back is against the wall.

WTI crude looks set to settle below $100 on the week and from the charts, we are seeing a semblance of a double bottom just below the $94 mark:

That will be an important level to watch before a potential drop towards $90 next. Recent sentiment hasn’t been too kind for the oil market outlook, even if OPEC+ is not going to mess things up. Let’s take stock of the situation.

China lockdowns, geopolitical tensions continue to threaten a further slowdown in the global economy
Rising inflation pressures are also weighing on the consumption outlook
Reserve releases by the US and IEA have led to a narrowing in backwardation spreads i.e. less worries about near-term availability of oil supply

So, while global inventories continue to look rather tight, the factors above are working against oil prices at the moment. There is good reason to expect a pullback but I would say that the main argument still holds. That being the first two factors are things that will pass eventually and the final factor is one that is only a temporary fix. Reserve releases do not help to restore the structural imbalances in the oil market.
As such, I would still side with the view that oil prices are going to stay elevated barring any destruction demand or a crash on recession fears. If there is a scenario like the latter, it would make for a perfect dip buying opportunity. Otherwise, any further pullbacks will also be attractive to scale more into longs in my view.
A push towards $90 may draw in some buyers but I think around the levels of $80 to $85, that is where we will see stronger plays from oil bulls in securing longer-term positions. At least I know I will.

Aims are being achieved and work carried out by military, peace negotiationsRussia continues to be adamant that things are going „on course“ for them. But then again, it is the kind of rhetoric that you have to expect from their side otherwise the alternative would be a sign of weakness.

This was already coming since the start of the week, so it isn’t anything new. The full announcement can be found here.The coal import ban is delayed to August 2022 as mentioned here but it is a start at least. It remains to be seen if the EU will have appetite to go after oil and gas but Germany certainly will be a key stumbling block once again if so.