Central bank meetings occupied the headlines last week. Although none of the banks announced policy change, the market was somehow moved by policymakers’ comments. Both the ECB and the BOE left their monetary stance unchanged. The ECB left the main refinancing rate unchanged at 0.75% and did not announce new quantitative easing measures. The central bank saw downside risks to economic developments. These risks include "the possibility of weaker than expected domestic demand and exports" and "slow or insufficient implementation of structural reforms" in the bloc. Meanwhile, the need to cut costs would delay recovery. President Draghi expected the Eurozone should return to growth in 2014 with the forecast range between 0- 2%. Inflation next year would range from 0.6% to 2%. The BOE announced to keep the Bank Rate at 0.5% and the asset purchases at 375B pound. The committee only released a short statement and details of the discussion should not be disclosed until release of the minutes on March 20. The BOC left the overnight rate at 1%, with the Bank Rate at 1.25% and the deposit rate at 0.75%. The policy statement was dovish as policymakers saw less urgency in rate hike than previously. The tone of the statement was similar to the previous one with the broad outlook for the Canadian economy similar to January's. Policymakers expected domestic growth would gain momentum through 2013 amid better household spending and business investment and exports. The RBA left the cash rate unchanged at 3% for a third consecutive in March. While the policy outlook would remain accommodative, the central bank paused this month as recent economic data suggested that Australia's economic growth was close to trend with the help of increase in resources sector investment. The central bank statement showed few changes from the previous month, signaling that policymakers were holding more or less the same views as last month's concerning the economic outlook. Masaaki Shirakawa also kept the overnight cash rate at 0.1% and held fire on asset purchases expansion at his last meeting in the capacity of the BOJ Governor.
In the US, the employment report for Februayr came in better than expected. Non-farm payrolls increased +236K, compared with consensus of 158K and a downwardly revised 119K in January. The jobless rate was lowered to 7.7% from 7.9% in January.
Crude oil: Although WTI-Brent spread narrowed and Brent crude price added less than 1% last week, the benchmark contract had a volatile week due to supply disruption in the North Sea. Production at the North Sea Buzzard oil field was suspended for 4 days until March 4. Last month, Buzzard also had an outage which brought loadings from 160K bpd to 80K bpd. Its operator, Nexen, was only able to restore slightly more than 100K bpd February 20. Yet the maintenance this time was more successfully. Not only was the work completed 10 hours earlier, but Nexen also stated that production is increasing after the maintenance. Buzzard produces about half of the crude steam for Forties, one of 4 grades that make up Dated Brent. The other blends are Brent, Oseberg and Ekofisk. The Brent crude pipeline system was shut for 5 days from March 2 due to the leak discovered on the Cormorant Alpha platform over the weekend. The pipeline system came back into service on Thursday and helped compress the time differential.
Natural Gas: The DOE/EIA reported a -146 drop of gas storage to 2 083 bcf in the week ended March 1. Stocks were -361 bcf less than the same period last year and -269 bcf above the 5-year average of 1 814 bcf. Separately, Baker Hughes reported that the number of gas rigs fell -13 units to 407 in the week ended March 8. Oil rigs increased +8 units to 1 341 and miscellaneous rigs remained unchanged and the total number of rigs fell -5 units to 1 752. Directionally oriented combined oil, gas, and miscellaneous rigs added +10 units to 195 units while horizontal rigs dropped -11 units to 1 130 units and vertical rigs slid -4 units to 427 during the week.
Precious Metals: Palladium surged last week after a report from China’s NDRC that the government would strive to lower carbon emission and improve energy efficient this year. China’s plan to implement China VI standards in 2016 and its bias toward gasoline-fueled vehicle would raise demand for palladium as auto-catalyst. Indeed, China’s imports of the metal rose to a 6-month high in January. Strike in South African mines has also raised concerns over future outputs.
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