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No US rate hike is in sight for now

Published Thursday, May 22nd, 2014

It was a good day for “risky-asset” bulls as a series of positive financial and oil data sent prices higher. Stock market players grew in confidence when they learnt that eurozone consumer confidence hit a six and a half-year high in May. Additional support was found in the Fed’s minutes as exit policy was discussed, but increasing interest rates still does not seem an option. The DJIA gained 0.97% and the S&P 500 index 0.81%.

The PMI season of the month has started overnight with numbers out of the Far East less disappointing than in recent months. Japanese manufacturing showed slowing contraction as its index rose from 49.4 in April to 49.9 in May. Although the HSBC Chinese factory index is still below the crucial 50 market it has risen to 49.7 this month, which is a five-month high.

Apart from the stock market support, oil prices were driven by the release of the weekly statistics on US oil inventories from the EIA discussed below. The other main oil-related news of the day was the signing of the Chinese-Russian gas deal worth $400 billion. It is certainly a political victory for Russian President Putin as Moscow is working hard on losing European customers from the West over the Ukrainian stand-off.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.