The European Central Bank confirmed plans to end its hallmark stimulus scheme in the third quarter, worried that high inflation could become entrenched. Lagarde also delivered a stark warning on inflation, noting that longer-term inflation expectations were showing early signs of moving above the ECB's 2% target. "The last thing that we want is to see inflation expectations at the risk of de-anchoring," Lagarde said, adding that "close monitoring" would be required. The ECB last raised interest rates over a decade ago and has kept its deposit rate in negative territory since 2014. Markets now price in 63 basis points of rate hikes before the end of the year, a modest retreat compared with 70 basis points priced in prior to the meeting. This is a negative signal for the stock market.
Trading recommendation: sell 6615 and take profit 6502.
European Union was moving toward adopting a phased-in ban of Russian oil, to give Germany and other countries time to arrange alternative suppliers. The International Energy Agency had warned that roughly 3 million barrels per day of Russian oil could be shut in from May onwards due to sanctions or buyers voluntarily shunning Russian cargoes. OECD crude stocks were 185 mb less than the latest five-year average and 194 mb below the 2015–2019 average. OECD product stocks stood at 1,345 mb, representing a deficit of 148 mb compared with the latest five-year average and 128 mb below the 2015-2019 average. This is a positive signal for oil prices!
Trading recommendation: buy 103.10 and take profit 108.77
Europe recently had to reconsider its emissions-cutting ambitions in light of the danger of an unprecedented energy crunch. U.S. natural gas producers are only too happy to help. President Biden pledged an additional 15 billion cubic meters of natural gas exports to the European Union this year in the form of LNG, while the EU pledged to create the demand for 50 billion cubic meters annually of U.S. LNG "until at least 2030". Last week, natural gas prices hit the highest level in 13 years. For the week ending April 15, the Energy Information Administration reported that national natural gas stocks were 20 percent below the five-year seasonal average. The agency noted that stocks of working gas were within the five-year average, and yet prices continued to rise.
Trading recommendation: buy 7.33 and take profit 7.75