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Putin surprises the markets

Published Monday, May 12th, 2014

A rather uneventful Friday summed up a rather uneventful week with little change in both stock and oil markets. Sentiment was more on the bullish side as the DJIA finished at yet another all-time high and gained 0.43% on the week. The Russian stock market settled more than 7% higher week-on-week responding to President Putin’s apparent U-turn on the Ukraine. The MSCI global equity index closed 0.20% lower from Thursday’s settlement price and 0.26% down from the previous Friday.

For the bulls there were good Eurozone and UK PMI figures to savour and the Fed’s chairwomen’s confirmation that the US economy still needs central bank support. Bears will have noted that the OECD cut its global growth forecast again and evidence that the Chinese economy continues to under-perform was reflected in dismal PMI figures.

In the oil market the WTI/Brent arbitrage was more volatile last week as the components of the spread went their separate ways. The June arb gained 93 cents/bbl made up of a 23 cents/bbl weekly gain in WTI and a 70 cents/bbl loss on Brent. The big weekly draw in Cushing as well as in USGC crude oil inventories supported WTI. On this side of the Atlantic Libya continued to disappoint but more importantly in the short-term threats of a Russian energy embargo from either the supply or demand side were removed.

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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.