Get Ready For Oil Prices To Drop As Canadian Oil Workers Begin To Return

Oil prices turned lower after gains of 3.5 percent Wednesday and its highest settle since November. The U.S. government detailed an unexpected fall in crude inventories. And the IEA said global oil markets are heading towards a long-awaited equilibrium. As traders settle down for the day WTI is trading at 46.30 slightly in the green, while Brent is down 7 cents at 47.44 while both remain close to their highest level.  A surprising drop reported Wednesday evening in US EIA weekly inventories helped the price boost.  Oil prices held near six-month peaks on Thursday as the International Energy Agency (IEA) forecast a sharp drop in the supply glut, and following a surprise fall in US crude reserves.

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The IEA forecast that the stubborn oil glut will “shrink dramatically” later this year, following wildfires that have disrupted Canada’s output and on buoyant Indian demand. The IEA’s monthly report was published one day after news of a drawdown in US oil inventories that signaled strong demand in the world’s top oil consumer – and sent prices racing. The “surprise draw (fall) in US crude oil inventories was very supportive for crude futures”, brokers told AFP.

Demand for oil worldwide is set to grow at a “solid” rate in 2016, with India the “star performer” after making up nearly 30% of the global increase in demand in the first quarter of the year, the IEA said.

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In Canada, devastating wildfires near Fort McMurray forced a shutdown of 1.2 million barrels a day (mb/d) of production early this month. The IEA said the events in Canada, however, had not sent oil prices sharply higher, as would have been expected some years ago, with crude having shown little reaction amid overall improved market sentiment.

Oil is expected to reverse gains significantly over the next 24-48 hours as Canada is ready to return to production. Canadian oil-sands facilities representing more than 90 percent of production taken offline during a wildfire in northern Alberta have emerged unscathed and are expected to restart within days to a couple of weeks.

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Mines and drilling projects north of Fort McMurray are already bringing back some of the roughly 1 million barrels a day of supply that was curbed, Steve Williams, chief executive officer of the nation’s largest energy company Suncor Energy Inc., said Tuesday, speaking for the industry. Facilities south of the energy hub that represent much less of the lost supply and were more affected by the fire may take longer, he said.

“It’s that quick — some facilities are turning back up the volumes now,” Williams said at a media briefing in Edmonton, flanked by his peers at companies including Imperial Oil Ltd. and Canadian Natural Resources Ltd. Other projects to the south may take longer. “South, where there have been a few more direct impacts from the fire, we have to go in and evaluate and put the plans in place.”

While the lost production has helped to buoy oil prices, ample supplies of crude across the continent have aided in cushioning the blow to refineries. Volumes of crude moving on the Calpine pipeline from the U.S. Gulf Coast to the Midwest have jumped 27 percent from a week ago, according to Genscape data. That indicates refiners have started to secure alternatives to curtailed Canadian supply, John Auer, executive vice president at Turner Mason & Co. in Dallas, said Tuesday in a phone interview.

Oil-sands companies are working with pipeline and power providers to bring back necessary infrastructure and don’t expect any hiccups that would hinder restarts. Ken Smith, President of Unifor Local 707, a union that represents 3400 Suncor Energy workers, said the company will to fly employees back to its oil sands base plant from Thursday.

Suncor Chief Executive Steve Williams said none of the company’s facilities in the area, which have a production capacity of about 350,000 barrels per day (bpd), had been damaged, and he expected to be able to restart production soon.

Industrial Production Down by 0.8% in Euro Area

There was disappointing news for the industrial sector in the euro area and in the European Union (EU), as production decreased by 0.8% and 0.5% respectively.

The estimates from Eurostat, were slightly more positive compared to the data for February, as activity in the sector decelerated at the faster pace of 1,2% in the euro area, and 0.8% in the EU.

Month on month in the euro area,  non durable consumer goods declined by 1.9%, followed by capital goods that fell by 1.1%, intermediate goods by 0.8%, and durable consumer goods by 0.4%, while production of energy rose by 2.0%.

There was a similar pattern in the EU, with non-durable consumer goods falling by 1.4%, both intermediate and capital goods by 0.7%, durable consumer goods by 0.5%, while production of energy also rose by 1.7%.

In March 2016 compared with March 2015, industrial production increased by 0.2% in the euro area, and by 0.3% in the EU

Figures for individual states showed that the largest decreases in industrial production were registered in Ireland with a minus score of 11.2%, Lithuania minus 3.5%, and Estonia minus 3.3%.

And the highest increases were found in Croatia climbing to 5%, Latvia , 4.3%, the Czech Republic 1.4%, and Spain 1.3%.

In both territories, the level of production has gradually increased since the end of 2012, but progress is still way down from the levels attained before the 2008 financial crash.

United States Was Germany’s Main Trading Partner in 2015

Provisional results from the German Federal Statistical Office, has revealed that the United States was the most valuable trading partner throughout 2015.

Goods to the value of 174.3 billion euros was traded between the two countries, with Germany exporting 114 billion euros across the Atlantic, while importing 59 billion euros of United States goods.

Germany exported more to the United States than any other country, with France being the second most influential export country with goods worth 103 billon euros, followed by the United Kingdom on 89 billion euros.

France has usually been the most significant trading partner for Germany for the past four decades.

Motor vehicles, trailers and semi trailers were the most influential export product, totalling 34.1 billion euros.

The volume of machinery transported to the United States was worth 17.7 billion euros, and the sales of pharmaceutical goods  reached 13.5 billion euros.

China came out on top out of all the countries that Germany import from, reaching 92 billion euros of goods.

The Netherlands and France were the next two most important import trading partners, as Germany spent  88 billion and 67 billion euros in both countries respectively.

France Inflation Increased by 0.1% in April

The Consumer Prices Index (CPI) in France has grown by 0.1% in April, according official figures, compared to March, where the CPI was 0.7%.

Price rises in the service sector, which spiralled upwards by 0.2% was a major reason for the CPI rise.

The rise in the cost of mobile phone services was the most influential within the sector, due to the 1.7% rise month on month, a 3.2% increase year on year.

Insurance prices also increased significantly to, as the prices reached a peak of a 1.1% rise in April compared to March.

Manufactures prices faltered, being reduced by 0.2% in April month on month, this was attributed to the result of sales promotions.

Food prices remained unchanged, although they increased by 0.4% on a year on year basis.

UK Posts Poor Production Activity Figures

The UK economy has been hit by a further blow, as the UK’s Office of National Statistics’ production output figures has decreased by 0.4% in the final quarter of last year, from the first quarter this year.

Manufacturing, the largest sector in the production base fell at the same rate quarter on quarter.

The 12.1% slide in the creation in coke and petroleum products, was the main reason for the manufacturing decline.

Total production output is also estimated to have decreased on a year on year basis by 0.2%, comparing March this year and last year.

There were decreases in two of the main four sectors, with the largest contribution coming from manufacturing, which decreased by 1.9%.

Month on month, there was more encouraging data, as production increased by 0.3% in March compared to the previous month.

Although there was disappointing news over the performance of the manufacturing sector, which only managed to rise by only a slender 0.1% margin in March, compared with February.

Transport equipment, which rose in activity by 2.7%, was the most impressive component of the manufacturing data.

Yesterday, it was revealed that the UK’s trade deficit was the worst it has been since 2008, and this followed poor purchasing manager index scores from Markit, in manufacturing, construction, and services.

While economic growth also fell by 0.2% in the first quarter of this year.

Despite this, then pound has not reacted badly in the GBP/USD rate, as sterling generally climbed against the dollar, up to falling following the release of the production outlet figures.

The pound is now buying $1.443, having reaching a nadir this morning GMT of buying $1.442, having peaked at buying $1.446 at the beginning of trading.

The US Bureau of Labor Statistics, reported that job openings in the United States was stable for March, but still boasts an impressive 5.8 million positions to be filled.

Turnover in German Manufacturing Down in March

Official figures have revealed that the turnover in the German manufacturing sector has fallen by 1.1% in March, when compared to February.

The estimate taken from provisional data on the sector, found that domestic turnover had decreased by 1.3%, while business with foreign customers also declined by a slower pace of 0.8%.

Manufacturing sales to other euro area countries was 0.5% down in March, which was still a more positive figure than the 1.1% fall in sales to other countries outside the single currency bloc.

The month on month figures for February from January, highlights that the latest results show a faster pace of turnover levels dropping, as turnover fell by 0.2% between those months.

Year on year, there was an increase of 0.7% in the amount of money created by manufacturing businesses in March.

Foreign transactions was the main reason why, as turnover with foreign customers spiralled upwards by 1.8%, mainly boosted sales to euro area countries which jumped up by 5.2%.

Although turnover with other foreign countries declined by 0.5%, and there was a decrease of 0.3% via domestic sales.

In the first quarter 2016,  turnover in manufacturing was 1.5% above the level of the same period of the previous year.

This was fuelled by domestic turnover, which  increased 1.3%,and foreign turnover that increased 1.6%.

German Exports Down Year on Year in March

The volume of German exports and imports has declined in March this year, compared to the same month last year, by 0.5% and 4.3% respectively, according to official figures.

Germany, Europe’s most powerful economy, exported goods worth 107 billion euros, while in return imported products that reached 89 billion euros.

The figures resulted in a 26 billion euro trade balance, that was bigger in contrast to March a year ago, where the trade excess was 23 billion euros.

Although the results were disappointing compared to what was found in February, where exports rose by 1.9%, and imports were down by 2.3%.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments, showed a surplus of 30.4 billion euros in March 2016.

While in March 2015, the German current account showed a surplus of 27.0 billion euros.

Breaking down the trade figures, Germany dispatched 62.6 billion euros of goods to the rest of the European Union (EU), and in return received EUR 53.9 billion.

Compared with March 2015, exports to the EU countries increased by 1.7%, while imports from those countries were down 2.1%.

There was a 1% rise of goods exported to euro area countries, while the value of the goods received from other euro area nations fell by 2.8%

Outside of the EU, the amount of goods sold amounted to 44.3 billion euros in March 2016, while imports from those countries climbed to 27 billion euros.

In total, exports to ‘third countries’ decreased by 3.4%, and imports from those countries by 8.3%.

Other important data has also been released from Germany today, as production in industry for March has fallen by 1.3%, the federal statistics office revealed.

The pace of the fall in production has escalated from February, where the decline in activity was 0.8%.

Within industry, the production of capital goods decreased by 1.4%, while the production of intermediate goods decreased by 1.3%, and the production of consumer goods by 0.2%.

UK Trade Deficit Worst Since 2008

The UK’s Office of National Statistics has found that the UK trade deficit is now at its worst since 2008.

Between the final quarter of last year, compared to the first quarter of this year, the trade deficit widened by £1.1 billion, up to £13.3 billion.

In March, the trade deficit was estimated to have been £3.8 billion, which narrowed by £0.5 billion from the figures for February.

The trade deficit with the rest of the European Union has fallen to £8.1 billion, ahead of the crucial referendum on June 23, when British citizens will decide on whether to remain or leave the EU.

Analysts have pointed the uncertainty of the possible ‘Brexit’, and tentative growth and demand in the global economy, as being main drivers of the deficit figures.

Italian Industrial Production Unchanged

There was more encouraging news from Italy over industrial performance in the euro area, as production in the sector was unchanged for March.

Over the first quarter of the year, industrial activity has increased by 0.7% compared to the final three months of last year.

Year on year, the Italian industrial production levels has also increased, albeit by a slightly slower pace of 0.5%.

In the period January-March 2016, the percentage change was plus 1.6% compared with the same period of 2015.

Oil Prices Tumble As Traders Book Profits

Oil reversed gains to trade deep in the red at the end of the day on Monday. WTI fell $1.13 to 43.53 as traders booked profits as the Canadian sands wildfire seemed to get under control today. On Sunday, cooler weather, light rain and winds opposed to the direction of flames helped control the advance of the blaze that razed Alberta’s oil sands boom-town Fort McMurray.

Brent oil followed crude falling $1.56 as the sudden change in oil administration in Saudi Arabia signaled a change in the goals by the Saudi’s which might indicate a chance of success at the June 2nd meeting.

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Don’t expect Saudi Arabia’s new oil boss to bring big change to OPEC’s June meeting, analysts warned, after the energy power replaced its long-serving minister Ali al-Naimi on Saturday.

“Al-Naimi’s removal is less a reflection on [his] policies, which really have carried the kingdom through two decades of highs and lows in the oil markets, than a reflection of the tough scope of the work ahead in Saudi Arabia” Emily Hawthorne, Middle East analyst at political consultancy Strafor, told CNBC’s “The Rundown”.

In a far-reaching government shake-up, Saudi Arabia replaced al-Naimi, who had been oil minister since 1995, with Khalid al-Falih, the chairman of state-owned oil company Aramco.

The change came after a sustained decline in oil prices; oil prices have fallen as much as 70 percent since mid-2014 amid an energy supply surplus and a slowdown in global demand growth.

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ClipperData’s commodity research director, Matt Smith, said that country’s move also signaled the growing prominence and power of deputy crown prince Mohammed bin Salman, who is leading the economic overhaul.

“He’s sending a message that they are making these decisions; they can make these calls on a more regular basis when needed,” Smith told CNBC’s “Squawk Box.”

Oil in New York erased its discount to international prices amid speculation reduced supply from Canada because of wildfires will accelerate the seasonal drop in U.S. crude stockpiles.

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According to Bloomberg the reduction of Canadian oil to the U.S. — which imported about 3.17 million barrels a day last year from its northern neighbor — is near-term bullish amid a seasonal drop in crude inventories, Morgan Stanley said in a report Monday. America’s peak summer driving season begins on Memorial Day, which falls this year on May 30, and typically results in a reduction of stockpiles as refiners maximize gasoline output.

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Assuming a 10-day ramp-up in activity, Alberta production could be down by 650,000 barrels a day over three weeks, or almost 14 million barrels in total, according to Goldman Sachs. That “will help accelerate the decline in U.S. crude inventories and the already occurring decline in total U.S. oil stocks.”

Several analysts are of the opinion that because Canadian crude production could come back online in the next few days, this could again raise bearish sentiments among oil traders, since worldwide oil production continues to grow despite a global glut.

Pound Falls Against the Dollar

The pound has fallen to a two week low against the United States dollar, and the GBP/USD relationship is currently $1.44, only 24 hours after reaching $1.452.

Fears over an vote to leave the European Union (EU) has not helped the cause of sterling, latest polls have indicated that the EU referendum will be a close call.

A YouGov opinion poll for ITV television, revealed that the “In” campaign leading by 42% to 40% for the “Out” camp, but the tight opinion polling has left traders anxious over the future of the UK economy.

On Thursday this week, the Ban of England will reveal in a statement their latest decision over interest rates, there is not expected to be any change over the 0.5% rate, and the amount of quantitative easing, with the current allocation £375 billion.

Influential building society the Halifax group, has revealed in a study that house prices have eased in the UK, with growth slowing to 9.2% in April  from  10.1% in March.

House prices last month actually declined month on month according to the group, falling by 0.8% when compared to March.

March was a positive month for house sales, as a record 165,400 properties were sold ahead of changes to the tax system, according to the HM Revenue and Customs department.

Monex Europe in the daily report said that sterling was on a steady downwards path last week, and has opened this morning in a similar vein, weakening further to USD and EUR.

They also pointed to Prime Minister David Cameron on the news wires this morning, reinforcing the government’s argument against Brexit. He also is  backing up comments from Chancellor George Osborne over the weekend,  that house prices would be adversely affected by Britain leaving the European Union.

The EUR/USD rate is stable, with the euro now buying $1.14, the euro has been forced back by the dollar over the past two weeks, the greenback has been boosted by the 160,000 increase in non farm payrolls, released last Friday.

Manufacturing Orders Up in Germany

New orders in manufacturing in Germany has risen by a month on month 1.9% in March compared to February.

This was an increase from the monthly figures for February from January, where the escalation of orders was 0.8%.

Price-adjusted new orders, without major orders in manufacturing had decreased in March 2016, a seasonally and working-day adjusted 0.6% on February 2016.

Domestic orders in March decreased by 1.2%, but the volume of foreign trade eclipsed any losses, as it rose by 4.3% month on month. For consumer goods, an increase in new orders of 1.6% was recorded.

Meanwhile in Spain, the annual rate of the industrial production Index stands at 2.8% in the series adjusted for the seasonal and calendar effects, and at minus 1.7% in the original series.

Euro Area Meeting Today

Greece President Alex Tsipras has said that today’s meeting of euro area finance ministers is a very important one for Greece, as the nations’ debt relief was on the agenda.

There does not appear to be many options on the table though for Greece, as they have already been given a lengthy period of time to pay off their debts, in a low interest rate environment.

U.S. Stocks Under Pressure after Release of Weak Employment Data

U.S. stock indices were lower Friday, following the release of a weaker-than-expected U.S. Non-Farm Payrolls report. June E-mini Dow Jones Industrial Average futures dropped to 17475 before rebounding to 17524, down 50 or -0.28%. June E-mini S&P 500 Index futures were trading 2035.00, down 9.00 or 0.44% and June E-mini NASDAQ-100 Index futures were on their low at 4271.00, down -29.25.

The April employment report showed creation of 160,000 jobs, with the unemployment rate at 5 percent and average hourly earnings rising 0.3 percent. The labor force participation rate fell to 62.8 percent.

According to Reuters, economists forecast 202,000 jobs were added in April. The unemployment rate was expected to be unchanged at 5 percent, while average hourly wages were expected to have grown by 0.3 percent.

Treasury yields fell, driving June 30-Year Treasury Bonds to 166’16 before breaking back to 165’13. June 10-Year Treasury Notes were trading 130’27, up 0.08%. The drop in yields suggests that investors have taken the possibility of a June interest rate hike off the table.

The fall in the Treasury yields made the U.S. Dollar a less desirable asset, helping to drive the US Dollar Index lower. The index initially fell to 93.085 before bouncing back to 93.685, down 0.095 or -0.10%.

The EUR/USD and GBP/USD were trading higher after the release of the jobs data. However, the AUD/USD continued to weaken, dropping 1.52% to 0.7737 in reaction to the news that the Reserve Bank of Australia slashed its inflation forecasts, suggesting they may implement as many as two more interest rate cuts by the end of the year.

The USD/CAD also bucked the trend, rallying to 1.2923, up 0.0070 or +0.55%. The catalyst behind the rally was a report showing employment in Canada unexpectedly decline in April amid cutbacks linked to the struggling energy industry and manufacturing. The Canadian Dollar dropped against the U.S. Dollar as Statistics Canada said employment fell by 2,100 positions in April, compared with the median forecast of a 1,000 job increase.

The weaker dollar helped June Comex Gold snap four days of losses. Gold advanced towards the psychological $1300.00 level and Monday’s high at $1306.00, reaching $1297.00, before falling back to $1293.20, up $20.90 or +1.64%. Gold is a dollar-denominated commodity that tends to rally because of increased foreign demand when the dollar weakens.

June Crude Oil turned higher after early session weakness, finishing at $44.44, up $0.12 or +0.27%.  Crude benefited from the weaker dollar and crude production cuts in Canada where a huge wildfire has disrupted oil sands operations.

GBP/USD in Steady Period

The GBP/USD rate has remained reasonably stable in the past 24 hours, and currently then pound is buying $1.449, appreciating only slightly from $1.448 at the beginning of trading GMT.

Both currencies fared well, in the face of several releases of negative data over their economies.

The UK has suffered a triple blow as purchasing manager’s indexes on construction, manufacturing, and the services sector, which represents four fifths of the UK economy, all delivered bad news.

All of them suggesting that the UK economy is now growing at its slowest pace for three years.

In the United States, claims for unemployment benefits rose by 17,000 for April, figures from the Labor Department revealed.

The euro has risen by a slender margin against the greenback this morning CET, with EUR/USD at $1.142, from $1.14 from the start of today’s exchanges.

From yesterday morning CET, the euro has fallen as it appreciated against the dollar to reach buying $1.15.

LMAX Exchange in their daily report, said that the lighter trading conditions, and a pre event risk position with regard to today’s all important non-farm employment result from the United States, were the drivers of the latest price action.

Also, the forex company believed that there was no new insights from yesterday’s  economic bulletin from the European Central Bank , but perhaps helped to fuel existing bearish sentiment for the single currency.

The dollar also gained ground on the euro, despite hawkish comments over a June rate rise from Atlanta Federal Reserve President Dennis Lockhart, which was echoed by his St Louis counterpart James Bullard, who was also undecided.

Euro Area Retail PMI drops to 14-month low in April

Markit’s latest purchasing manager’s index (PMI) for April has placed the retail sector’s latest score down to 47.9, from 49.2 that was recorded in March.

The PMI, which tracks the performances in the sector across Germany, France, and Italy, found that retail sales have declined at the beginning of the second quarter.

Behind the downturns was the fall in sales in both France and Italy, while in Germany, Europe’s most powerful economy, retail activity slowed to a three month low.

Although German retailers still were the best performing ones of the three, Italian sales fell at a modest rate.

The French sector suffered the most, an accelerated drop in sales that was the worst they have faced since February 2015.

Cost pressures for retailers also increased, as price inflation spiralled upwards to a three month high in April, but remained beneath the long term average.

Employment in the sector was broadly stable during April, this halts the trend from over the past five months, where employment levels increased.

In Germany, despite the weaker growth, there was job creation reported in the survey, but this was offset by reductions in employment in France and Germany.

Gross margins meanwhile showed another marked contraction, with retailers in Italy suffering the steepest decline.

Compared to 2015 , retail sales were lower in April this year, which was in contrast to the year on year for March.

Canadian Wildfire Limits Oils Price Declines

Oil prices continued to decline after soaring this week on worries about the wildfire effects on production. This is just a temporary effect but sparked a mini rally over the past days. WTI oil is trading at 44.18 down 14 cents while Brent oil is down 10 cents at 44.91. The disruptions helped offset the impact of a stronger dollar this week, which potentially reduces demand for crude as it makes dollar-traded imports more expensive for countries using other currencies. A massive fire around the Canadian oil city of Fort McMurray has forced the evacuation of all its residents and the closure of 690,000 barrels per day worth of production out of Canada’s total oil sands output of 2.2 million bpd. Adding to the production outage in Canada is an ongoing decline in U.S. output.

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Data by the U.S. Energy Information Administration (EIA) shows that U.S. crude oil output has fallen by 410,000 bpd this year, and by 800,000 bpd since mid-2015, as many producers succumb to a rout that saw prices tumble 70 percent between mid-2014 and early-2016.

Analysts said that the hits to North American output, combined with disruptions in Latin America, were contributing to a fast erosion of global oversupply that peaked as high as 2 million barrels’ bpd last year.

Some traders also pinned oil’s weakening to market intelligence firm Genscape’s report of a 1.35 million-barrels stockpile build at the Cushing, Oklahoma delivery hub for U.S. crude futures during the week to May 3. The Genscape report came on the heels of U.S. government data showing total crude stockpiles at record highs above 543 million barrels last week.

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On Thursday US crude oil prices initially jumped 5.0 per cent, with a huge wildfire near Canada’s oil sands region and escalating tensions in Libya stoking concerns among investors of a near-term shortage in supply, but pared gains on what traders said was likely profit-taking.

Firmer oil prices lifted shares of major European oil producers, while encouraging European earnings updates from firms including telecoms group BT and oil company Repsol helped prop up the stock market. The gains in European shares came after four days of losses.

The International Energy Agency said that a power struggle between supporters and opponents of Libyan government had cut up to 1 million barrels per day of crude production, more than the group’s previous estimate of as much as 750,000 barrels per day. Traders are also factoring in the possibility that political upheaval in other oil-rich countries could pinch global crude supplies.

“The spread of protests into other major oil producing nations such as Oman, Algeria and especially Saudi Arabia could keep this oil market on a boil for some time to come. Analysts said unrest in Libya was not enough to rally prices due to the huge world glut and increased production around the globe.

UK Services Growth Weakest in Three Years

The services industry has eased to its worst level of growth in three years, according to a PMI for April compiled by Markit and the Chartered Institute for Procurement and Supply.

The business activity index fell in the survey from 53.7 to 52.3, the lowest since February 2013.

Although the figure is still above the neutral 50.0 level, and the service sector has enjoyed, a 40- month spell of uninterrupted growth.

Currently, optimism in the sector has been curtailed by several factors, including the uncertainly emanating from the referendum on whether to leave the European Union (EU).

Some firms mentioned the delayed placing of new contracts by clients, due to the potential upheaval of a ‘no’ vote.

Upward pressure on input prices have also been at their highest since January 2014, and has been linked to the UK’s new national living wage, which can reach up to £8.25 per hour.

Outstanding business that was held by the service sector fell for the second time in 2016, a reflection of the relatively weak growth in the industry.

Employment did increase in the industry, with job creation rising to over the long time average of the survey, although employment growth was the weakest for two and a half years.

There was more positive news as there was a further rise in new business volumes, helping to support the overall growth of services activity.

UK Pound Falls Against the US Dollar

Downward pressure on the UK pound has reversed some of the recent appreciation that sterling has enjoyed against the US dollar.

Currently the pound is buying $1.44, a fall from  $1.45 that was reached in the early hours of this morning GMT, in what has been a turbulent GBP/USD relationship in the past 24 hours.

Sterling has come under pressure from poor performances in Markit’s latest manufacturing, construction, and now services  PMI‘s, which all signified that the UK economy is easing at the moment.

The spectre of leaving the EU is also continuing to haunt the fortunes of the pound.

In survey conducted by pollsters ICM, the campaign to leave the EU has recovered momentum from recent weeks, as 45% said they would be in favour of a ‘Brexit’, a 1% lead over those who with to stay.

Although in the Financial Times’ poll of poll tracker, the remain camp can boast a three point lead.

As they have claimed 46% from all of the polls taken, compared to 43% who want to walk away from EU membership.

The EUR/USD rate has favoured the greenback so far this morning CET, as the euro has fallen to buying $1.144, having just peaked over the $1.148 level at the beginning of trading.

FC Exchange analyst Daniel Wray in his daily round up of the forex market, alluded to a raft of PMI releases yesterday.

Euro area business growth was slow but steady, but the PMI suggested that that action taken by the European Central Bank is strengthening economic activity.

Even though so far it has failed to boost inflation, currently at minus 0.2% in the euro area.

Gold Traders Book Profits Ahead Of US Jobs Data On Friday

Gold declined for another session but the question is why? Gold dipped over $10 to trade at 1281.00 while silver came off its recent highs and declined 134 points to 17.34 while gave up $10 to 1061.45. Equities tumbled around the globe while economics data remained weak. There were some bright spots in the US but nothing that would support a change in the Federal Reserve and no reason for gold to show any reactions. Traders are beginning to look forward to the US nonfarm payroll report on Friday but today’s release of the ADP private payroll data was disappointing. A weak jobs number Friday would help the gold price especially as brokers believe a lot of the recent strength in the metal has been driven by speculative money.

gold-rally-stalls-on-weak-us-jobs-data

“Net long positions in gold, silver and platinum have increased dramatically, especially in gold and silver,” said ABN Amro.

“This could be a warning sign of near-term upside in prices. However, net positions could be substantial for a prolonged period of time.

The broker adds that the positive momentum is here to stay and that prices will rally further during the course of this year and next year.

Stephany Yang wrote today that Gold prices have benefited in the past week from a weaker dollar, as the Federal Reserve has kept short-term interest rates low and signaled that it will take a slow path to future interest-rate increases. Investors are hoping that monthly jobs data to be released on Friday will provide more clues to the health of the U.S. economy and the timing of another potential rate increase.

“Traders are looking ahead to the Friday jobs data, with a reluctance to take new positions” as gold nears $1,300, said Bob Haberkorn, senior market strategist at RJO Futures.

gold

Higher rates tend to weigh on gold, since they make yield-bearing assets like U.S. Treasurys more attractive in comparison.

Previous jobs report this year have signaled strong growth in the employment sector. However, with gold trading so closely against the dollar, Tom Kendall of ICBC Standard Bank warned investors that gold’s recent strength could quickly reverse.

“With the U.S. dollar making sharp reversals against multiple crosses, it is very much a case of buyer beware,” Mr. Kendall wrote in a Wednesday note.

The gold market saw some modest profit-taking pressure kick in from the shorter-term futures traders at late-morning Tuesday, after June Comex gold hit a 15-month high of $1,306.00 Monday. The U.S. dollar index also saw a corrective bounce today, after notching an eight-month low overnight. The firmer greenback today and weaker crude oil prices were also negative outside markets for the precious metals.

There was good follow-through selling pressure today and a bearish “key reversal” down was confirmed on the daily bar chart, which is an early technical clue that precious metals have put in a near-term top. The market bulls still have the firm overall near-term technical advantage.

 

 

 

UK Pound and Euro Weaken Against the US Dollar

The US Dollar has climbed upwards on both the UK pound and the euro, throughout yesterday and this morning.

Currently, GBP/USD rate is that sterling is buying $1.45, a mark that it has stayed around since the beginning of the day GMT.

This is a significant fall from yesterday morning GMT, where the pound was buying $1.47.

The pound is thought to have suffered from the less than encouraging manufacturing sector PMI results released by Markit yesterday, and the prospect of a ‘Brexit’ continues to shadow the fortunes of sterling.

The EUR/USD relationship has been similar to GBP/USD over the past 24 hours.

The euro now buying $1.14, from reaching just over $1.16 yesterday morning, the highest rate since August last year.

LMAX Exchange analysts in their daily round up, opined that the combination of a technically extended market, in addition to a renewed wave of risk off trade, oil weakness, and patchy liquidity have propelled dollar demand.

Hawkish comments from Dennis Lockhart and John Williams, the Federal Reserve chiefs from Atlanta and San Francisco respectively, where they were both supportive of a June rate hike, may also have factored into euro weakness.

Volume of Retail Trade Down by 0.5% in Euro Area

The latest Eurostat figures on the retail trade sector has shown that the volume of trade has been reduced by 0.5% in the euro area, and 0.7% in the European Union (EU).

The figures are disappointing when compared to February, where activity in the retail industry in the euro area increased by 0.3%, and was stable in the EU.

In contrast to the same month a year ago, the calendar adjusted retail sales index increased by 2.1% and 2.4% in the euro area and EU respectively.

The main areas where trade has fallen in the sector month on month in the euro area , are in food, drinks and tobacco by 1.3%,  for non food products by 0.5% , and 0.4% in automotive fuel.

In the EU, food drinks and tobacco declined by the same volume, while non food products fell by 0.1% more, automotive fuel performed better falling by 0.1%.

Among Member States for which data are available, the largest decreases in total retail trade were found in Portugal on minus 5.2%, Denmark minus 3.9%, and Estonia  minus 1.8%.

While the highest increases were registered in Finland on plus 1.1%, Slovakia 0.9%, and Bulgaria 0.8%.

UK Construction Industry Falls to Three Year Low Says Markit Survey

The Construction industry in the UK has contracted in April,  revealed the latest PMI on the sector from financial research company Markit.

The latest survey reading for the construction industry was 52, above the no change mark of 50, but growth had eased from the 54.2 score that was recorded in March.

There have now been three years of sustained growth in the sector, but the April survey reading is the lowest expansion of business activity since mid 2013.

Commercial building was the most successful part of the sector for April, although this upturn was the slowest since July 2013.

Residential construction bounced back only slightly from a 38 month low in March.

Industrial Producer Prices up by 0.3% in Euro Area

In March industrial producer prices rose by 0.3% compared for February according to Eurostat.

Across the European Union (EU), there was similar positive news as prices increased by 0.4%.

The European Central Bank (ECB) will welcome the news, in their battle to fight against deflationary conditions in the euro area.

Annual inflation in the 19 member states if the euro area is minus 0.2%, despite the raft of measures that the ECB has used to combat deflation; including an extended quantitative easing programme to 80 billion euros a month, and the lowering of the bank deposit facility rate to minus 0.4%.

Although In March this year, compared with March 2015, industrial producer prices decreased by 4.2% in the euro area and by 4.1% in the EU.

The increase in producer prices was mainly due to a 1.2% rise in energy sector prices, and 0.2% for durable consumers goods in the euro area

Whereas prices remained stable for capital goods, they fell by 0.1% for both intermediate goods and non-durable consumer goods. Prices in total industry excluding energy decreased by 0.1%.

A 1.9% rise in the energy sector was the main reason why prices had increased in the EU, an the cost of durable consumer goods matched the  0.2% figure for the euro area.

The highest increases in industrial producer prices were found  in Greece 1.8%, Estonia 1.6%, Belgium 1.4%, and the United Kingdom  on 1.2%.

While the largest  decreases were  in Cyprus minus 1.6%, Lithuania and Slovakia both on minus 0.7%.

UK Manufacturing PMI Falls

 Markit’s latest UK manufacturing PMI  has fallen to 49.2, its lowest level since the survey was taken in February 2013.

The figure was below the no change mark of 50, the first time that there has been a figure below the neutral level since March three years ago.

The main reasons for the decline in the manufacturing sector, was attributed to lacklustre trends in production, and new orders and declines in both employment and stocks of purchases.

This was mainly felt in the consumer and the investment goods sectors, with both registering declines in production and new work received.

Although the investment goods sector managed to stave off some of the negative traits, as growth of output was maintained, and new order inflows, but the volume of expansion was slower compared to the previous month.

Companies said that operating conditions had deteriorated due to a combination of a reduction in growth in domestic demand, and the easing of new business in overseas markets.

There was also reports from the respondents in the survey that the prospect of an exit from the European Union is effecting business adversely.

Other issues that were thought to have damaged business prospects, included the uncertainties surrounding the oil and gas industry and the retail sector, which has led to clients becoming more cautious in their spending.

New export orders also fell for the fourth consecutive month, albeit by a slender margin, as growth internationally continued to slowdown.

Investment goods producers reported a sharp drop in new export business, this was in contrast to the mild improvements that have been seen in the consumer and immediate goods section.

The GBP/USD rate has continued to favour sterling despite yesterday’s public holiday in the UK.

The pound is currently buying $1.47, rising from just over the $1.465 at the beginning of the day GMT.

Despite the ongoing ‘Brexit ‘ fears, the pound has enjoyed a much improved performance against the greenback, since the first week in April.

Can Gold Break $1300 Before Silver Breaks $18

It’s been a battle between the bulls and bears since the beginning of the year. After the FOMC rate increase in December gold bulls seemed to have given up the battle but they never forfeit the war. Gold soared to trade above 1298 but investors were unable to secure the $1300 price before prices eased to 1295.20. Silvers climb was miraculous adding almost 300 points on Friday to trade at 17.85 after hitting a high of 17.98 as traders continue to push the $18 level. Platinum moved to 1080.00 at the top of its trading range.  Silver futures rallied Friday, tallying a gain of roughly 15% for the month, as gold futures settled at their highest level since late January of last year. The dollar-denominated metals got a solid boost from a weaker dollar.

gold and silver for article

Gold Eagle News reported that Gold is up nearly 21% from its December 2015 lows. Moreover, silver has added an impressive 28% to its price during the same time frame. Most notably, the HUI gold and silver mining index is up over 100% during this period.

Despite the strong performance we have seen from the precious metals complex thus far in only the first few months of 2016, many fear that the move is already nearing an end.  Readers should be aware that the potential for both gold, silver, and strong mining equities is much greater than the moves seen thus far. Indeed, a review of the metals and several valuation metrics over a longer time frame can provide us with clues as to what we should expect through the later part of this decade.

Gold bottomed in 2001 after a nearly 20-year bear market following the peak in 1980 at $850/oz. The return advance to again challenge the $850 level took eight years, although it was not until the following year (2009) that prices decisively broke through this level for good.

gold silver ratio chart

Turning to the gold to silver ratio, just in the last week as silver broke higher through our important resistance level near $16.25, we note an important trend change in the ratio between the two precious metals. Since the precious metals peak in 2011, as both gold and silver fell, it should be observed that silver had fallen further than gold on a percentage basis. Whereas in April of 2011 it took roughly 30 ounces of silver to buy one ounce of gold, in January of 2016 it took an incredible 84 ounces of silver to buy that same one ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to a six-month low on Friday of 71.8, down from 81.3 at the start of the month.

gold

Seeking Alpha said that Nothing can stop gold’s ascent, according to many market commentators, and we wholeheartedly agree. The U.S. dollar doesn’t look likely to strengthen a great deal now until at least the September FOMC meeting, which may allow gold to start to make a move on an all-time high. Buying gold or a quality gold fund right now is a great move in our view, and we expect even after recent gains to see sizable returns over the next few months. An all-time high may seem a little far-fetched and, let’s be honest, it has a long way to go before it will get there.

platinum

 

Euro Area Annual Inflation Down to -0.2%

In a flash estimate, Eurostat have revealed inflation has retreated back into negative figures in April at minus 0.2%, from the 0% that was recorded for March.

Unsurprisingly there was a continued huge fall in energy prices, which has significantly contributed to the spiralling down into negative inflation.

Although the pace of the energy price fall slightly eased in April, falling by 8.6% compared to 8.7% in March.

Services were thought to have the highest rate of annual inflation in the survey, the change of the price level between the current month and the same month of the previous year, reaching 1%, this was in contrast to 1.4% in March.

This was followed by food, alcohol and tobacco, which at 0.8% remained stable from the figures from the previous month.

Non energy industrial goods also remained the same month on month at 0.5%.

This latest assessment from Eurostat will come as a huge disappointment to the European Central Bank (ECB), as deflation is the situation they most wish to avoid.

Last month, the Governing Council of the ECB released a raft of measures to boost inflation, including expanding their quantitative easing asset purchasing programme to 80 billion euros per month.

Also, the bank deposit facility rate was lowered to 0.4% from 0.3% in the attempt to force banks to release more capital into the real economy.

It is far to early to say whether those measures failed, but continued deflationary figures could force the ECB into more drastic action.

GDP up by 0.6% in the Euro Area and by 0.5% in the EU

There was more positive news on GDP figures, rising by 0.6% in the euro area and 0.5% in the European Union (EU), in the first quarter of this year.

The preliminary flash estimate also published by Eurostat revealed that they believe that GDP increased by 0.3% and 0.1% for the euro area and the EU respectively, compared to figures from the fourth quarter.

Year on year, GDP hiked by 1.6% in the euro area, and by 1.7% in the EU in contrast to the first quarter of 2016.

Compared to the previous quarter, GDP increased by 1.6% in the euro area, and 1.8% in the European Union.

Unemployment is down in the euro area by 0.2% in March compared to February, with Eurostat complied data unveiling that unemployment is 10.2%.

This is the lowest figure for those without positions since August 2011.

The EU unemployment rate was 8.8% in March 2016, down from 8.9% in February 2016, and from 9.7% n March 2015.

In a similar patter to the euro area, the data is favourable compared to recent history, and is the lowest unemployment has been for seven years.

The markets have reacted positively to the Eurostat data so far, in what has been a major release of data, today CET, the EUR/USD rate has favoured the euro as it has climbed to buying $1.138 from beginning the day at $1.135

Retail Turnover in Germany Rises by 0.7% for March

Official figures have revealed encouraging news for the retail sector in Germany, as turnover increased by 0.7% in March this year, compared to the same month a year ago.

The number of days which were opened for sale was 25, one day than during 2015.

For the first quarter of this year, turnover in retail was 1.5% in real terms, and 1.6% in nominal terms 0.1% higher, when compared to the first quarter of last year.

When adjusted for calendar and seasonal variations, the March turnover was in real terms 1.1 % and in nominal terms 0.9%, which was a reduced figure from February.

Gold Rises As Lackluster US GDP Closes The Door On June Rate Increase

Gold soared on Thursday after US GDP preliminary showed an unexpected contraction. GDP printed at 0.5% for Q1 against expectations of 0.7%. Gold gained over $16.00 to trade at 1266.65 as the drop in growth signals that the Fed will not be ready to raise rates anytime soon. On Wednesday the FOMC held rates and policy and issued a rather generic statement which left the door open to a rate increase in June but that door was slammed shut after today’s data release. Silver gained 231 points to 17.52 its highest level in years and outpaced all precious metals gaining $26.50 to 1051.90.

US GDP

Markets were just absorbing the surprise from the BoJ after the central bank held rates and policy as the odds were on increasing stimulus from the meeting. The BOJ inaction came despite a report released Thursday that showed consumer price inflation in Japan down 0.3% in March, year-on-year. The BOJ is battling slow economic growth, price deflation and an appreciating yen on the world foreign exchange market.

Kitco News reported that technically, June gold futures prices closed nearer the session high and scored a bullish “outside day” up on the daily bar chart today. The gold bulls have the firm overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,287.80. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of 1,239.10. First resistance is seen at the April high of 1,272.40 and then at 1,280.00. First support is seen at 1,260.00 and then at 1,250.00.

gold

“The longer the Fed holds off on raising rates, the better for gold,” HSBC said in a note. “The bullion market will now focus on the prospects of a Fed hike at the next meeting in June, and the possibility that the Fed will tighten later this year may help cap bullion prices.” Gold has rallied 17% this year on expectations that the Fed will not raise rates aggressively this year due to global economic risks. The US central bank hiked rates in December for the first time in nearly a decade.

After three straight years of losses, analysts are finally prepared to say gold prices have found a floor, with rising prices seen this year and next as concerns over the pace of US monetary policy tightening fade. (BDlive).

platinum

Interest-rate policy can influence demand for nonyielding-bearing assets like gold, putting them in competition with those offering yields. The cautious path for both central banks has bolstered the case for continued bullish bets on the precious yellow metal and other metals.

The Fed seems likely to take no action on rates while “data continue to present a mixed picture of the economy,” said George Milling-Stanley, head of gold strategy at State Street Global Advisors. So the market will probably “suffer bouts of uncertainty ahead of future Fed meetings this year.”

Marketwatch reported that meanwhile, the iShares Silver Trust the world’s largest physically-backed silver exchange-traded fund, marks its 10th anniversary Thursday. According to the Silver Institute, it accounts for 94% of all U.S. silver ETF holdings. It was trading 0.8% higher Thursday.

silver

The UK Pound Rises Against US Dollar After Statement

So far, the UK pound has started the day in an assertive mood GMT against the US Dollar, rising to buying $1.459, from beginning the day at $1.454.

The GBP/USD rate has moved in favour of sterling, after the statement from the Federal Reserve, as expected, left its main interest rates unchanged 0.25% to 0.5%.

Although there were strong hints on a possible hike on interest rates in June.

This adds to the recent waves of goodwill towards the pound, including pro-European messages from Barack Obama, and the favourable remain the European Union poll readings, all which have had a hand in the pound’s recent improved performance.

In contrast to this, the UK economy has suffered some negative data, following the recent announcement of the slowdown of growth to 0.4% in the first quarter of this year.

The Confederation of British Industries in their latest distributive trends survey, revealed that retail performances on the high street have fallen to their worst level in the year leading up to April, since January 2012.

The 117 companies who took part in the study, said that that orders placed on suppliers also fell over the year, while sales for the time of year were considered to be average. More positively, sales are expected to pick up next month.

According to the influential Nationwide Building Society, house price growth in the UK in April slowed to 4.9%, in comparison to 5.7% in March, following the surge of property purchases.

The rise was fuelled by buyers avoiding the rise in duties on buying second homes, that came into effect on April 1.

Euro Also Climbs on the US Dollar

The euro has also started the day positively against the greenback, as the EUR/USD rate started the day with the euro buying just below $1.133, and has since leapt up to currently being to the value of $1.135.

Despite the dollar losing ground, Omer Esiner, an analyst with the Commonwealth Foreign Exchange, said that the Federal Reserve’s the tone over the future of the economic backdrop had improved.

The statement eradicated the warnings over the global economic outlook, that was a major part of the March statement.

Employment in Germany Up by 1.2% Year on Year in March

Official figures have released encouraging data on levels of employment in Germany, in March this year compared to a year ago, there were 530,000 more jobs created, an increase of 1.2%.

Month on month, employment numbers were hiked between February and March by 150,000, or by 0.3%, with an jobs upturn in the spring cited as a major reason.

The results of the comparison from February were even more positive, factoring in that the average  increase in the same month over the past five years was 124,000.

Additionally, for the employment figures for all of last year, and for January and February this year, have been recalculated.

The revised figures have shown, that the monthly results produced year on year rates of change, which were 0.1 percentage points higher than the previously calculated results.

FOMC Statement Causes No Volatility In Gold

Ahead of the FOMC statement on Wednesday afternoon gold was trading at 1250.85 seeing a gain of just about $7.50 while silver added 170 points to trade near its highest level at 17.280. Platinum continues to trade near recent highs at 1026.90. In the days leading up to the Fed decision traders were sure that the members would make no changes at this meeting but the excitement would be in the wording of the statement and seeing if the Fed left the door open to an increase at its June meeting.  The US dollar offset golds rises to fall 14 points exchange at 94.32. The greenback had been falling on lackluster economics data over the past few days. Today’s climb in GDP and the better than expected trade balance kept golds gains to a minimum.

The Fed held rates at 0.50% as the US dollar rallied on the immediate release of the statement. The US dollar surged to 94.50 reversing losses to gain 7 point as gold gave back some of today’s gains to trade at 1246.50.  The statement was rather bland.

gold before and after FOMC

The statement read:

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

A survey released by the Gold Fields Mineral Services today showed gold demand down 29% in the first quarter to 781 mt, down from 1,097 mt in Q4 2015. They noted especially weak demand in China and a 56.3% drop in Indian gold consumption compared to the same quarter a year earlier.

Marketwatch ran an interesting analyst on Wednesday looking at the rally in platinum which has been trading near its lowest point in a month since the beginning of the year.  Buy platinum the article read. Platinum has already crushed gold in 2016, advancing about 22% vs. 17% for gold.

This trend is likely to continue for a simple reason. Historically, platinum often sells for about 1.5 times the value of gold per ounce. Recently, though, it’s sold for about 80% the price of gold. This discount may well continue to close — as it has so far this year — and then revert to a premium. As this happens, platinum will keep outperforming gold.

platinum

This is a classic “reversion to the mean” story. “It’s pretty rare for platinum to be below the price of gold,” agrees Ryan McIntyre, an analyst with Tocqueville Asset Management, who is also bullish on platinum.

The Volkswagen emissions scandal has investors thinking that demand for its diesel-engine cars will be in trouble for a long time. Platinum is essential for catalytic converters used with diesel engines. (In contrast, in gasoline engine converters, palladium can substitute for platinum.) So if demand for diesel cars goes down, demand for platinum would, too.

UK GDP Increases but Growth Eases

The UK’s economy has increased by 0.4% in the first quarter of this year according to their Office of National Statistics, but progress has been halted from the 0.6% figure that was recorded for the final quarter of last year.

Increases in services reached 0.6%, but this was offset by growth decreases in other major sectors of the economy.

As production spiralled downwards by 0.4% in the first quarter, construction output dropped by 0.9%, and agriculture also fell by a relatively slender margin of 0.1%.

Year on year, the level of GDP was 2.1% higher compared to the same quarter a year ago.

The latest GDP figures are estimated to be an increase of 7.3%, from the peak of the pre economic downturn of the first quarter of 2008.

Many analysts predicted a fall in output, as the referendum to leave the European Union continues to weigh heavily on the British economy.

Some commentators, such as those from Barclays, believed that the fall in GDP would be even greater, with expectations that GDP could have been down to 0.3%.

Disagreement is continuing on what these latest figures mean for future, whether this is a sign that the UK’s performance will no longer outstrip other G7 economies, or whether it is a temporary blip.

There have also been increases expectations for a rate rise in the UK, but the latest GDP figures are hardly likely to provoke more calls for an increase in rates.

Pound Settles Against the US Dollar

The GBP/USD is set for a turbulent day after the release of the GDP figures, with the UK pound currently buying $1.45, which is the level where it started the day.

The UK GDP Data, could be cushioned from numbers from the US Commerce Department, which revealed that the demand for durable consumer goods, did not rebound in March as was expected.

Even though there was an increase of 0.8%, following a decline of 3.1% in February.

Demand for automobiles, computers, and electrical goods has slumped in comparison to anticipations.

The EUR/USD rate began the day with the euro buying $1.13, before reaching a peak so far today CET of buying $1.133, now the euro fallen back  to purchasing $1.13.

Import Prices in Germany Down by 5.9%

Official figures have reported that Germany’s import price index fell by 5.9% in March 2016, compared the figures from a year ago.

Prices have decreased at a faster pace in contrast to the figures from January and February, where costs were reduced by 5.7% and 3.8% respectively.

 

Month on month, the figures were in reverse, as between February and March the figures hiked by 0.7%.

Also, the price index excluding crude oil and mineral oil products, decreased by 3.6% compared with the level of a year earlier.

The export price index decreased by 1.6% in March, in a comparison to the same month in 2015.

Whereas, in February and in January 2016 the annual rates of change were minus 1.2% and  minus 0.5%, respectively.

In a similar pattern to import prices, from February to March 2016, the export index rose month on month by 0.2%.

Saudi Arabia Approves “Vision 2030” Moving Away From Oil Dependence

Oil prices reversed losses in Asia on Tuesday morning with WTI gaining 40 cents to 43.04 and Brent oil up by 41 cents to 44.73. Traders are hoping that renewed interest in the June 2nd producers meeting will reach an accord after the April 20th meeting showed massive discord among OPEC members. Saudi Arabia seems to be the dominant factor in a final agreement as they bide their time to unfold their new future plans for revitalizing and shifting the Saudi economy away from its dependence on oil.  According to Reuters crude oil futures rose, pushed up by a weaker dollar and a flood of new cash into the market, but analysts warned that fundamentals remain weak as a producer race for customers heats up in the Middle East.crude oil

“The global market is already close to balance, as analysts expect the market will try to test higher in coming months,” Standard Chartered bank said, adding that falling output OPEC would result in a rebalancing of oil markets soon.

Yet other analysts warned of more supply as Saudi Arabia and Iran seemingly ramp up output in a race for customers, further flooding the market with excess supplies.

brent oil

“Saudi Arabia announced that it will complete an expansion of its Shaybah oil field by June, pushing capacity to 12 million barrels per day. Iran oil production has now increased by 1 million bpd since the beginning of the year, while Kuwait is expecting output to reach 3.15 million bpd by June after the end of a workers strike,” ANZ bank said.

Iran wants to get back to pre-sanction production of 4 million bpd. “The biggest bear risk to the oil market right now is that Iran’s ramp-up accelerates and then that Saudi Arabia does the same,” Citi said.

Just hours ago the Saudi Arabia’s cabinet has agreed on a broad-based economic reform plan, known as Vision 2030, revealing how the oil-reliant state plans to diversify its economy over the next 14 years.

saudi-arabia-vision-2030

Prince Mohammed bin Salman, the deputy crown prince, said on Monday that the country was building up the its Public Investment Fund to become a major player in global markets. He said Saudi Arabia was restructuring its housing ministry to increase the supply of affordable housing, and creating a “green card” system within five years to give expatriates long-term residence.

Salman al-Ansari, founder and president of the Washington DC-based Saudi American Public Relations Affairs Committee (SAPRAC), told Al Jazeera the green card system gives more rights to expatriates to invest in the country.

“Almost 10 million foreigners send their money back to their country, they can’t invest in this country, so by this green card idea, we are giving more rights to expats for investment or buy houses,” he said.

“That will create a big move for the Saudi economy. It is a visionary kind of move to not only help the Saudi economy and Saudi citizens but also help the foreigners in the country.”

Saudi Arabia will also sell shares in state oil giant Aramco and set up the world’s largest wealth fund in line with the plan, Mohamed bin Salman said separately in an interview to the Saudi-owned Al Arabiya news channel.