News of terror attacks in Belgium have shaken up financial markets and the western world generally. Oil is gauging the sentiment in broader markets and is taking its lead from that. Hence, as the US dollar firms and equities look lower, crude is selling off. Here are five things to consider relating to markets today:
1) On the economic data front, Japan has kicked off the latest round of preliminary manufacturing releases, with a surprise drop back into contractionary terrain at 49.1. Despite both German and French manufacturing coming in below consensus, the Eurozone number on the aggregate has shown a tick higher to a better-than-expected 51.4. Preliminary Eurozone services data also came in better than expected, boding well for the official March numbers out late next week (hark, April Fool’s day). US preliminary manufacturing has come in below consensus, but showing expansion at 51.4.
2) We’ve had quite the economic data deluge out of Europe today ahead of the atrocities which are overshadowing everything. UK inflation numbers have shown the struggle that the British economy is having in trying to clamber away from deflationary terrain; inflation came in below consensus at +0.3% YoY, as February disappointed.
Meanwhile, we’ve had business sentiment data out of Germany, which was below consensus for both current conditions and for a 6-month forward outlook. For the Eurozone, the 6-month forward outlook came in better than expected, but is still the lowest since October 2014.
3) Realization is starting to dawn on the oil market that depletion rates are going to take their toll on global oil production levels, exacerbated by the hole that is going to be left by a dearth of new projects coming to market. According to Rystad Energy,