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ECB Keeps Policy Unchanged as Investors Seek Economic Update

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European Central Bank
  • ECB Keeps Policy Unchanged as Investors Seek Economic Update

The European Central Bank maintained its pledge to move slowly in winding down euro-area stimulus, as investors wait to see if President Mario Draghi will unveil a more upbeat economic outlook.

Policy makers reiterated that they’ll halve asset purchases to 30 billion euros ($35 billion) a month, starting in January and continuing until at least the end of September. They left interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net bond-buying.

They also repeated their pledge to step up or extend the program if needed, and stressed that additional support will come from their policy of reinvesting maturing debt.

Attention will now turn to the updated growth and inflation forecasts Draghi is set to reveal in a press conference at 2:30 p.m. in Frankfurt. They’ll offer a first glimpse of the economy in 2020, the year after the Italian’s term ends.

An improved outlook, as signaled by Governing Council member Jens Weidmann late last month, may trigger questions on whether policy makers will stick to their plans for a slow exit.

“Inflation remains stubbornly low,” said Bjoern Eberhardt, head of global macroeconomic research at Credit Suisse. “Nevertheless, given that the ECB will provide new forecasts that should reflect the improving euro-zone outlook, we think the sound of the press conference should be somewhat less dovish than in October.”

Although most economists predict officials will bring bond purchases to a gentle halt in the final quarter of 2018 and start raising interest rates well into 2019, some outliers say faster-than-forecast inflation and growing financial-stability risks could force quicker action.

In a spate of decisions in the past 24 hours, the Federal Reserve announced its third interest-rate increase of the year, China unexpectedly edged borrowing costs higher, and Norway signaled it may start raising rates earlier than previously expected. The Swiss National Bank predicted inflation will exceed its goal in late 2020 but said it won’t rush to boost rates. The Bank of England, after the first hike in a decade last month, kept policy on hold.

Slow Inflation

The ECB is moving as slowly as possible to avoid stoking market volatility that could undermine the euro area’s economic upturn. While economic growth has become increasingly robust since quantitative easing started almost three years ago, inflation has seen little progress toward the goal of just under 2 percent.

Draghi may offer further details on the composition of asset purchases in 2018 after he said in October that the region’s central banks would continue buying “sizable” quantities of corporate bonds. The ECB’s Market Operations Committee has been reviewing that part of the program to gauge its effectiveness, according to euro-area officials familiar with the matter.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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