Oil prices edged higher on Thursday, set for their biggest monthly gain in nearly six years, as a weekly drop in U.S. oil stockpiles for the first time in months reinforced expectations that U.S. crude supplies are near a peak. U.S. crude for June delivery rose 0.8% (or 48 cents) to $59.08 a barrel after touching this year’s high of $59.40. Meanwhile, Brent crude for June settlement, the global benchmark, gained 0.7% (or 47 cents) to trade at $66.29 a barrel. Despite recent rally, oil prices are still more than 40% below their June 2014 high
Russia’s central bank cut the key interest rate Thursday for the third time this year, taking advantage of a record ruble rally and slowing inflation. The central bank cut its key rate from 14% to 12.5% and said further rate cuts are likely in the latest sign that the worst of a currency crisis triggered by western sanctions and plunging oil prices is over. The rate decision can be attributed to significant headwinds to economic growth as well lingering inflation risk.
High Income Economies
In an upbeat sign for the labor market, the U.S. Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits pulled back more than expected to their lowest level April 2000 in the week ended April 25th. First-time jobless claims dropped to 262,000 from the previous week's revised level of 296,000. Economists had expected jobless claims to edge down to 288,000 from the 295,000 originally reported for the previous week. The less volatile four-week moving average dipped to 283,750 from the previous week's revised average of 285,000. Continuing claims also fell by 74,000 to 2.25 million in the week ended April 18th.
Largely reflecting slower decline in energy prices, Eurozone consumer prices remained flat in April after falling for four consecutive months. The harmonized index of consumer prices showed no change in April following a 0.1% (y/y) fall in March and 0.3% decline in February, flash data from Eurostat showed Thursday. Core inflation that excludes energy, food, alcohol and tobacco remained unchanged at 0.6%, matching economists’ expectations. Separately, the Eurozone jobless rate remained at 11.3% in March, unchanged from both February and January. It was the lowest since May 2012.
GDP for Taiwan, China grew at a faster pace in Q1 according preliminary figures from the Department of Statistics. Output expanded 3.46% (y/y), faster than the 3.35% growth in Q4. Economists had expected the growth rate to accelerate to 3.50%. Increases in private consumption and exports supported the acceleration in activity, more than offsetting a contraction in investment and stronger import growth. On a quarterly basis, GDP advanced 1.10% (q/q saar) in Q1, slower than the 4.75% growth seen in Q4.
Latin America and the Caribbean
Mexico held interest rates steady at a record low on Thursday as a tame inflation outlook continues to give policymakers the breathing room to focus on boosting growth. Banxico, the Mexican central bank, kept rates unchanged at 3%, as expected by economists. Annual inflation rate fell to 3.0% in February, in line with Banxico's goal.
Kenyan inflation rate rose to 7.08% in April from 6.31% in March, mainly due to a jump in food prices. Food costs surged 13.42%, the largest increase since June 2012. Large price increases were also reported for housing, water, electricity and gas; clothing and footwear; furnishings and household equipment; miscellaneous goods and services and hotels, cafés and restaurants. In contrast, downward pressure came from transport costs. On a monthly basis, consumer prices rose 1.82% (m/m) - the highest in four years.