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Trends

Rotterdam: $ 5 lower
Singapore: $ 5 lower
US Gulf: $ 4 higher

Central banks all over the place (Brent: $106.4)

A great deal happened on the central bank stage yesterday. The Bank of Japan promised to inject the equivalent of $1.4 trillion into the economy over the next 2 years, a move that instantly made the Yen drop and the Nikkei increase. After the devastating earthquake and the subsequent close of nuclear power plants, Japan's oil imports have been at multi year highs. If these actions by BoJ will spur growth, the amount of imported oil could increase even further from today’s +3.5 mbpd.

In Europe, chairman of the ECB Mario Draghi struck a rather soft tone at the press conference. With the comment "monitor very closely" (ECB speak for: We are considering cutting rates at the next meeting, but still not entirely sure), he opened the door for a rate cut at the May meeting. This would have a very limited practical impact on the European economy, as rates are already close to zero. It would, however, have a large (short term positive) effect on asset classes if the ECB follows through with what Mr. Draghi repeated several times: "the ECB will look at possibilities for using non-standard measures" – also known as QE.

The market today will be in a wait-and see mode until the all important U.S. non-farm payroll at 14.30 CET. Considering the massive surge in Federal Withholding-Tax Collections during March, we expect today’s number to be a lot better than the consensus of 200k. If it does not severely beat expectations we expect a major (upwards) revision when the numbers are finalized. Caution is advised around 14.30 CET today!

Recommendation:

We highly recommend consumers to keep an eye out for a sharp upwards move the coming weeks. History tells us that the divergence in the financial markets should not be ignored! Over the past days the divergence has continued to increase. When the spread equities-Brent corrects it will be a major move in a short time span. The two geopolitical wildcards Venezuela an Iran could be the trigger for rising oil prices.