Important developments today:
1. Oil prices continue to retreat on high U.S. crude stockpiles
2. U.S. initial unemployment claims registers first drop in four weeks
Oil prices continue to retreat on high U.S. crude stockpiles. U.S. crude futures extended their decline on Thursday as U.S. oil inventories reportedly climbed to the highest level in 21 years. Oil prices suffered steep losses yesterday, with the market weighed down by a round of gloomy job and manufacturing data in Europe, which rekindled worries over the global economy. The U.S. Department of Energy said that U.S. crude oil stocks increased 2.8 billion barrels to 375.9 million barrels, the highest level since September 1990. Crude oil for June delivery slid as much as 56 cents to $104.66 a barrel on the New York Mercantile Exchange, after contracting 94 cents a day earlier. Brent oil for June settlement fell as well, slipping below $118 a barrel in today’s London session. Brent premium to U.S. crude oil was at $12.82 a barrel.
U.S. initial unemployment claims registers first drop in four weeks. For the week ending April 28th, the number of people claiming first time unemployment benefits in the US fell by 27,000 to 365,000 – the first decline in four weeks. Notwithstanding the decline in the weekly numbers, the four week average, which removes weekly volatility trended up by just under a 1000 claimants to 383,500 [see Chart at http://prospects or http://www.worldbank.org/prospects]. Looking forward prospects for further US employment gains could firm up (at least in the manufacturing sector) as the latest Purchasing Manager’s Index suggest. Indeed not only did the US manufacturing PMI increase to 54.8 from 53.4 suggesting an acceleration in activity (the 50-mark divides expanding activity from contracting), but the sub-index on employment also grew at a faster pace, rising from 56.1 in March to 57.3 in April.
Among Emerging Markets
In Europe and Central Asia, Turkey’s consumer price inflation rose to 11.1% year-on-year (y/y) in April, the highest in over 3 years, from 10.4% in March driven in part by increases in natural gas and electricity costs. However, core inflation (excluding food and energy) also accelerated suggesting that domestic demand still remains strong. Russia’s HSBC-Markit Purchasing Managers’ Index rose to 52.9 in April, the strongest performance in more than a year, from 50.8 in March, led by strong increases in the sub-indices for production, export orders and employment (A level above 50 indicates expansion).
In South Asia, Pakistan’s consumer price inflation rose to 11.3% (y/y) in April from 10.8% in March, driven by a higher pace of increase in food and transport costs. This was in contrast to a deceleration in wholesale price inflation, suggesting falling demand among producers even as retail prices continue to rise.