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Markets Fluctuate Ahead of ECB

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By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets have endured another negative day in Europe as investors await tomorrow’s hotly-anticipated ECB meeting.

Much like the other two days this week, it’s hard to read too much into today’s trading as there’s very little of note driving it. And with the ECB tomorrow, US inflation on Friday and the Fed next week, there are far more pressing matters ahead than the selection of headlines of recent days.

The World Bank warning of potential recessions, a UK Prime Minster barely surviving a confidence vote and a major US retailer lowering profit guidance as a result of excess inventory have been among the focal points this week but they all comfortably play second fiddle to what’s to come over the next seven days.

The ECB is up first tomorrow and the central bank has a lot of questions to answer. When will net asset purchases officially end? How many rate hikes can we expect this year? How will they manage the fallout in the bond markets? The task is far from straightforward but the cost of inaction is potentially severe. The central bank will have to tread carefully in the coming months to prevent unwanted consequences.

Oil higher despite surprise inventory build

Oil prices are edging higher once more even as the EIA reported a surprise increase in inventories last week. The market remains extremely tight and that is keeping the upward pressure on crude prices. The OPEC+ increase was more a token gesture than one of substance and the continued reopening of China means demand is going to rise further. To make matters worse, oil workers in Norway could begin strike action this weekend causing supply disruptions to a relatively small amount of output, to begin with. ​

Steady ahead of US inflation data

Gold is back above $1,850 but continues to fluctuate in the same ranges it has for many weeks now. For gold, it’s all about the US inflation data on Friday and the Fed next week. Any surprises in the inflation data could shake things up in the markets and see the yellow metal break the recent range, perhaps even quite aggressively. While a US recession isn’t the base case at the moment, a few more nasty surprises on the inflation front could see that change.

Volatile but not going anywhere

We’re continuing to see plenty of volatility in bitcoin but very little actual direction. The daily ranges are wider but the end result is the same. This could be another that is awaiting the inflation data before deciding where to head next. The set-up is still bearish at this point but as ever, it may not take much to tilt that the other way and a significant break of $32,000 could deliver just that. ​

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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