QE or not to QE is the question in Europe. Not even a soaring Euro and a falling dollar is giving the oversupplied oil market much support despite high tensions in the Ukraine. While the dollar is giving precious metals boost oil seems a bit less moved. Perhaps it is worries about demand after slow data weak from China yesterday and a murky outlook from the Organization for Economic Cooperation.
The Wall Street Journal reports that in its twice-yearly Economic Outlook report, the Paris-based research body once again lowered its forecast for global economic growth, since it now expects a number of large developing economies to be more sluggish than it anticipated when it last published projections in November. They also say that "the European Central Bank should immediately cut its benchmark interest rate, and may even then have to take additional measures to end a period of too low inflation in the euro zone."
Yet the Euro continues to rise hitting a 2-month high and the U.S. Dollar Index (NYBOT:DXM14) futures making new June contract lows. A strong reading from Spain's and Italy's Purchasing Managers Index gave the Euro a boost. If some of the weakest countries in the EU are turning around is it possible that the EU will not print more Euro's?
The oil market is ignoring the fact that the fighting in Ukraine is intensifying. The Wall Street Journal Reports that "Heavy fighting erupted Monday around a pro-Russian separatist stronghold in eastern Ukraine, with dozens of casualties reported as the standoff between insurgents and the government entered a more dangerous phase. The fighting was the most sustained since acting President Turchynov first sent troops to eastern Ukraine about three weeks ago, in what he called an antiterrorist operation. Accounts from both sides suggested the military was pushing further into the volatile, heavily defended city of Slovyansk, following days of intermittent clashes focused there.
Goodbye winter and hello summer! Heat on the West Coast and the Midwest switching from heaters to air conditioners is raising the demand for natural gas. We should see a 76 injection this week but there will be more doubts as to whether or not the market can refill storage!
Continue to stay long!
You can now follow me on Twitter at energyphilflynn and also like me on Facebook.