The oil market(NYMEX:CLK14) is still locked in a delicate balance of geopolitical risk and ample supply. Talks with Russia that seemed to go nowhere increase the odds that there will be more sanctions directed at Russia. Russian Troops are still on the Ukraine border.
The West Texas market may be getting some support from the aftermath of the collision and oil spill in the Houston Shipping Channel that may impact oil supply in the Gulf Coast. At the same time the odds for more stimuli in China and Europe are increasing.
Eurozone inflation hit a five-year low increasing the odds that the European Central Bank will move to buy loans and other assets from banks to help support the Eurozone economy or quantitative easing European style. The Eurozone economy is well below the central bank's target. The Eurozone inflation rate fell for the third consecutive month to a new low of 0.5% in March well below the target range of 2%.
Chinese stocks rose after hopes that China’s Premier Li Keqiang will act to support the Chinese economy. More stimulus increase demand expectations but there are still lingering worries that China after allowing one default may not be able to put the genie back in the bottle. If the official manufacturing data disappoints Tuesday another round of stimulus will happen. That may also give gold a bounce. Weakness in the Chinese economy and a rising currency has slowed Chinese demand. Yet the market looks like it is bottoming looking for a little help from our Chinese friends.