CEIC Gallery/World Economy - June 8, 2016
Oil Settles Above $45 as Production Stalls
- Since mid-2014 crude oil prices and production has been one of the most closely followed topics worldwide. The increased global supply, accompanied by sluggish economic growth in developed countries, and therefore decelerated oil demand, resulted in free falling oil prices. The low point was reached in January 2016 when the price of OPEC basket slumped to USD 23.66.
- In the beginning of June all benchmark crude oil prices (U.K. Brent, Dubai, WTI & OPEC) have settled above USD 45 for the first time in the last 7 months. In 2015, OPEC oil production rose 7%, while in the first four months of the 2016 oil production increased just about 0.7%. According to many analysts, stalling production and rising demand are expected to wipe out the excess supply that sent the markets to 12-year lows and now we see first signs of supply glut easing.
- CEIC Gallery/Hot Topics/Crude Oil (OPEC)
World Economic OverviewFOREX Market Developments
- The Japanese Yen has gained more than 11% against the USD since the beginning of the year. In May the Yen reached a 20-month high against the dollar, after the Bank of Japan introduced negative interest rates in line with its extraordinarily easy monetary policy.
- The Euro has also appreciated against the USD this year, gaining more than 4% since January. Euro's substantial strenghtening started in March when the European Central Bank announced new rate cuts implementing unprecedentedly low interest levels.
- CEIC Gallery/Markets/Foreign Exchange Market Commodity Markets at a Turning Point?
- Commodity prices have been bouncing back since the beginning of the year tipping several markets into bull market territory.
- All Primary Commodities Price Index has increased more than 15% since January.
- The broad-based recovery has been led by steadier oil prices, China’s assurances that it will continue to support economic growth, investors hedging against anticipated inflation, weakened US dollar and India’s rising role in consumption.
- CEIC Gallery/Markets/Commodity Market
Emerging Markets MonitorPBoC Expects China’s M2 Growth to Slow Down in the Next Few Months
- PBoC expects China's M2 money supply to increase steadily in the coming months but the year-on-year growth would slow down due to the large M2 money supply last summer. PBoC injected liquidity to the market during the summer in 2015 amid the stock market crash to prevent financial crisis.
- China’s M2 money supply was RMB 145 trillion in April 2016, up 12.8% yoy.
- CEIC Gallery/Emerging Economies/China at a Glance China's New Loans dropped around 60% yoy in April
- China’s new loans was RMB 555.6 billion in April, down 59% yoy and 22% mom. In which, medium and long term loans account for 57% of the total.
- New loans to household dropped 34% to RMB 421.7 billion while new loans to non-financial enterprise and government Agency & organizations dropped 79% to RMB 141.5 billion.
- PBoC claimed that there were no changes to China’s monetary policy. The major reason of the decline was the exclusion of new local government bond issuance for refinancing old debt. Other factors included seasonal factors and the reduction in corporate bond financing due to banks' increased caution on risk control.
- CEIC Gallery/Emerging Economies/China New Loans High-level Officer Described China’s Economy as L-shape
- People’s Daily, recognized as Chinese Government’s mouthpiece, indicated that China’s economic trend would be in “L-shape”. It erased expectations of any strong stimulus policies from the Chinese government in the near future.
- Li Keqiang Index can be a good reference of China’s GDP growth. It is compiled by electricity consumption, medium & long term loans and railway cargo throughput, which are released prior to China’s GDP growth.
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