RBI cuts rates by 25 bps, Government proposes a National Gold Spot Exchange & muted rise in US crude inventories

02nd Feb – 08th Feb

1. US Crude inventories increased less than expected indicating good demand

February 06, 2019

U.S. government data on Wednesday showed that domestic crude inventories rose less than expected last week even as refineries hiked output. Stocks increased 1.3 million barrels in the week ended February 1, compared with analysts’ expectations of an increase of 2.2 million barrels. Gasoline stocks increased by 513,000 barrels, less than anticipated, while distillate stockpiles fell a greater-than-expected 2.3 million barrels.

Source: Reuters

2. US factory orders rises from a two year low

February 02, 2019

US factory orders rose in January from a two-year low as measures of new orders and production snapped back following steep declines in the previous month, indicating a more stable outlook for manufacturing at the start of 2019.

Source: Reuters

3. API reported increase in US Crude oil supply

February 06, 2019

API reported a surprise crude oil build-up of 2.098 million barrels and a build-up in 1.731 million barrels and 1.141 million barrels of gasoline and distillate inventories respectively for the week ending February 1. Crude oil inventories at the Cushing, Oklahoma facility rose by 889,000 barrels for the week.

Source: Reuters

4. Saudi wants Russia to remain with OPEC+ for monitoring oil supply

February 05, 2019

Oil prices will be closely monitored by dominating players such as Saudi and Russia. Saudi wants Russia to be a part of the deal to manage world oil supplies for the next three years. Russia became a part of the OPEC+ coalition when a deal was finalized in the year 2016 and now Saudi wants to extend it for a further three years.

Source: CNBC

5. Gold Spot Exchange to be reality soon in India

February 05, 2019

The government proposes to set up a single spot exchange for gold, and is also finalizing a method to organize metals trade a year after the idea was mentioned in the 2018-19 Budget. The Gold Spot Exchange will provide transparent prices and liquidity in the gold market, and this decision is being welcomed by investors. China also has a similar gold spot exchange.

Source: Business Standard

6. India’s deficit will balloon to uncomfortable levels if Oil prices touch $90 per barrel

February 05, 2019

The Union Budget 2019-20 has expectedly shown a slip in the fiscal deficit at an estimated 3.4% for the current as well as the next fiscal year. If oil rallies towards $90 per barrel, this could spell big trouble as deficits will balloon uncomfortably. The Current Account Deficit (CAD) would rise to 3.5% of the Gross Domestic Product (GDP), the highest since 2012-13.

Source: Live-mint

7. US jobs growth surged in January

February 03, 2019

US jobs growth surged in January, with employers hiring the most workers in 11 months, pointing to underlying strength in the economy despite an uncertain outlook that has left the Federal Reserve wary of more interest rate hikes this year. The dollar index remained firmed and kept the rupee under pressure after positive US economic data and buying from importers. The US economy added 304,000 jobs as compared to 222,000 jobs in the previous month.

Source: Economic Times

8. RBI surprises by cut in interest rate by 25 bp and a Dovish policy statement

February 08, 2019

The Reserve Bank of India’s Monetary Policy Committee (MPC) reduced the policy interest rate by 25 basis points to 6.25 %. The RBI policy is a very dovish one and signals further rate cuts. Inflation estimates have been revised very sharply lower. As per the policy statement, the inflation rate is estimated at 3.2-3.4% in the first half of the year 2019-20 and 3.9% in the third quarter of 2019-20, which is below previous expectations; this was cheered by the equity markets.

Source: Economic Times